Stable agreements through liability rules: a multi-choice games approach to the social cost problem

Kevin Techer ()
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Kevin Techer: Univ Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint-Etienne, France

No 2028, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: We consider a class of social cost problems where one polluter interacts with an arbitrary number of potential victims. Agents are supposed to cooperate and negotiate an optimal pollution level together with monetary transfers. We examine multi-choice cooperative games associated with a social cost problem and an assignment (or mapping) of rights. We introduce a class of mappings of rights that takes into account the pollution intensity and we consider three properties on mappings of rights: core compatibility, Kaldor-Hicks core compatibility and no veto power for a victim. We demonstrate that there exist only two families of mappings of rights that satisfy core compatibility. However, no mapping of rights satisfies Kaldor-Hicks core compatibility and no veto power for a victim.

Keywords: Externality; Liability rules; Multi-choice cooperative game; Core (search for similar items in EconPapers)
JEL-codes: C71 D62 Q52 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-des, nep-gth and nep-ore
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Persistent link: https://EconPapers.repec.org/RePEc:gat:wpaper:2028

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