A Price-Quantity Mechanism to Implement Lindahl Allocations with Forthrightness

Sébastien Rouillon

Revue d'économie politique, 2011, vol. 121, issue 5, 751-766

Abstract: We provide a new price-quantity mechanism to implement the Lindahl allocations as Nash equilibria. We show that it satisfies the property of forthrightness, introduced by Saijo et al. [1996]. Thus, at a Nash equilibrium, each player reports directly and honestly his personal price and his demand for the public good and obtains the corresponding commodity bundle. Using the gradient process to formalize the behaviour of the players out-of-equilibrium, we show that, in quasi-linear economies, the Nash equilibrium of the game is globally stable.

Keywords: Lindahl equilibrium; economic mechanism (search for similar items in EconPapers)
Date: 2011
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