Gale's Fixed Tax for Exchanging Houses

Tommy Andersson, Lars Ehlers, Lars-Gunnar Svensson and Ryan Tierney

Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ

Abstract: We consider the taxation of exchanges among a set of agents where each agent owns one object. Agents may have different valuations for the objects and they need to pay taxes for exchanges. Using basic properties, we show that if pairwise (or some) exchanges of objects are allowed, then all exchanges (in any possible manner) must be feasible. Furthermore, whenever any agent exchanges his object, he pays the same fixed tax (a lump sum payment which is identical for all agents) independently of which object he consumes. Gale’s top trading cycles algorithm finds the final allocation using the agents’ valuations adjusted with the fixed tax. Our mechanisms are in stark contrast to Clarke-Groves taxation schemes or the max-med schemes proposed by Sprumont (2013).

Keywords: fixed tax; exchanges; top trading (search for similar items in EconPapers)
JEL-codes: C71 C78 D63 D71 D78 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2018
New Economics Papers: this item is included in nep-des and nep-gth
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Related works:
Journal Article: Gale’s Fixed Tax for Exchanging Houses (2022)
Working Paper: Gale's Fixed Tax for Exchanging Houses (2021)
Working Paper: Gale's fixed tax for exchanging houses (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:mtl:montec:08-2018

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