A Solution to the Problem of Externalities When Agents Are Well-Informed

Hal Varian ()

American Economic Review, 1994, vol. 84, issue 5, 1278-93

Abstract: The author describes a class of simple two-stage mechanisms that implement efficient allocations as subgame-perfect equilibria for economic environments involving externalities. These mechanisms, known as compensation mechanisms, solve a wide variety of externalities problems, including implementation of Lindahl allocations, regulation of monopoly, and efficient solutions to the prisoner's dilemma. Copyright 1994 by American Economic Association.

Date: 1994
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Related works:
Working Paper: A Solution to the Problem of Externalities when Agents are Well-Informed} (1994)
Working Paper: A Solution to the Problem of Externalities when Agents are Well-Informed (1991)
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