A simple market-like allocation mechanism for public goods

Essen, Matt Van; Walker, Mark

doi:10.1016/j.geb.2016.02.002

Cited by 14 publications

(2 citation statements)

References 28 publications

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“…In addition to acceptability, other important properties of the mechanism that are relevant to our study are: (iii) the mechanism is budget balanced, (iv) a Nash equilibrium of this mechanism is individually rational, and (v) the Lindahl outcome is an equilibrium outcome. For a detailed discussion of these properties see Van Essen and Walker (2017) and Van Essen and Walker (2019).…”

Section: The Van Essen and Walker Mechanismmentioning

confidence: 99%

Provision of noxious facilities using a market-like mechanism: A simple implementation in the lab

Alberti

Mantilla

2020

Preprint

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We study the provision of a public project that globally behaves as a public good but locally behaves as a private bad. This scenario imposes two problems: (i) finding a compensation that makes the project acceptable for the pre-determined host, and (ii) securing the budget to pay for the project and the required compensation. We use a market-like mechanism with two useful properties for this scenario: players can either contribute or request subsidies to fund the public project, and players have veto power over the desired project quantity. In our game, two players benefit from a waste incinerator facility, whereas the third group member, the host, is harmed if the facility is too large. We analyze the efficiency and the re-distributive potential of this mechanism, with and without communication, among group members. We find that the probability of positive provision did not differ with and without communication. However, average provided quantities with respect to the efficient quantity increased from 54% to 81% with communication. We also find that contributions fell below the Lindahl taxes, allowing the players who benefit from a larger facility to accrue most of the efficiency gains. The latter result is consistent with the infrequent evidence of veto threats as a bargaining strategy.

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Section: The Van Essen and Walker Mechanismmentioning

confidence: 99%

Provision of noxious facilities using a market-like mechanism: A simple implementation in the lab

Alberti

Mantilla

2020

Preprint

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show abstract

“…They address a ''not in my backyard''-NIMBY-or ''locally unwanted land use''-LULUsituation, acronyms revealing the emphasis on the siting problem (Popper, 1983;Schively, 2007). The other strand, addressing the sizing problem, has focused on incentive-compatible mechanisms that guarantee the efficient provision of public goods, often with personalized taxes reflecting the intensity in the valuation of the public project (Chen, 2002;Van Essen and Walker, 2017).…”

Section: Introductionmentioning

confidence: 99%