Choosing and Sharing

Jérémy Laurent-Lucchetti and Justin Leroux

MPRA Paper from University Library of Munich, Germany

Abstract: Implementing a project, like a nationwide nuclear waste disposal, which benefits all involved agents but brings major costs only to the host is often problematic. In practice, revelation issues and redistributional concerns are significant obstacles to achieving stable agreements. We address these issues by proposing the first mechanism to implement the efficient site (the host with the lowest cost) and share the exact cost while retaining total control over realized transfers. Our mechanism is simple and in the vein of the well-known Divide and Choose procedure. The unique Nash equilibrium outcome of our mechanism coincides with truthtelling, is budget-balanced, individually rational and immune to coalitional deviations. More generally, our mechanism can also handle the symmetric case of positive local externalities (e.g., Olympic Games) and even more complex situations where the usefulness of the project---regardless of its location---is not unanimous.

Keywords: Public goods; local externalities; NIMBY; implementation; mechanism design; VCG mechanisms (search for similar items in EconPapers)
JEL-codes: C70 D61 H41 (search for similar items in EconPapers)
Date: 2009-04
New Economics Papers: this item is included in nep-cdm, nep-cta, nep-pbe, nep-ppm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Choosing and sharing (2011)
Working Paper: Choosing and Sharing (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:14929

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