TY - JOUR
T1 - No externalities
T2 - A characterization of efficiency and incentive compatibility with public goods
AU - Ostroy, Joseph M.
AU - Segal, Uzi
PY - 2012/10
Y1 - 2012/10
N2 - We show that efficient anonymous incentive compatible (dominant strategy) mechanisms for public goods eliminate externalities, i. e., each individual is unable to change the welfare of anyone else. The characterization is used to derive existence and non-existence results for models with a finite number of individuals and to explain existence results in the continuum. A similar characterization and conclusions are demonstrated for private goods in (J Econ Theory 85:169-225, 1999). However, unlike private goods, elimination of externalities with public goods implies that individuals cannot change the outcome. Hence, such mechanisms provide only weak incentives for truth-telling.
AB - We show that efficient anonymous incentive compatible (dominant strategy) mechanisms for public goods eliminate externalities, i. e., each individual is unable to change the welfare of anyone else. The characterization is used to derive existence and non-existence results for models with a finite number of individuals and to explain existence results in the continuum. A similar characterization and conclusions are demonstrated for private goods in (J Econ Theory 85:169-225, 1999). However, unlike private goods, elimination of externalities with public goods implies that individuals cannot change the outcome. Hence, such mechanisms provide only weak incentives for truth-telling.
UR - http://www.scopus.com/inward/record.url?scp=84867096282&partnerID=8YFLogxK
U2 - 10.1007/s00355-011-0553-2
DO - 10.1007/s00355-011-0553-2
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AN - SCOPUS:84867096282
SN - 0176-1714
VL - 39
SP - 697
EP - 719
JO - Social Choice and Welfare
JF - Social Choice and Welfare
IS - 4
ER -