Optimal mechanisms for siting noxious facilities

Denis Lescop ()
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Denis Lescop: CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE]

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Abstract: We study Bayesian mechanism design in the context of the siting of noxious facilities. Under incomplete information, we characterize optimal mechanisms facilitating the siting and cost sharing of the facility. These mechanisms are allocatively and Pareto efficient. However, it appears that transfers occur when the good is not provided. This result is due to the weakening of the incentive notion to Bayesian-Nash equilibrium and to the balanced budget condition. This phenomenon disappears if the setting is perfectly symmetric.

Keywords: Bayesian equilibrium; Auctions; Club good; Externalities (search for similar items in EconPapers)
Date: 2007-03
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Citations: View citations in EconPapers (16)

Published in Review of Economic Design, 2007, 10 (4), pp.273 - 284. ⟨10.1007/s10058-006-0018-8⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02549668

DOI: 10.1007/s10058-006-0018-8

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