Choosing and Sharing
Jérémy Laurent-Lucchetti and
No 07-13, Cahiers de recherche from HEC Montréal, Institut d'économie appliquée
Choosing a project for which benefits accrue to all involved agents but brings major costs or additional benefits to only one agent is often problematic. Siting a nationwide nuclear waste disposal or hosting a major sporting event are examples of such a problem: costs or benefits are tied to the identity of the host of the project. Our goals are twofold: to choose the efficient site (the host with the lowest cost or the highest localized surplus) and to share the cost, or surplus, in a predetermined way so as to achieve redistributive goals. We propose a simple mechanism to implement both objectives. The unique subgame-perfect Nash equilibrium of our mechanism coincides with truthtelling, is efficient, budget-balanced and immune to coalitional deviations.
Pages: 24 pages
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Journal Article: Choosing and sharing (2011)
Working Paper: Choosing and Sharing (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:iea:carech:0713
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