American Economic Review Vol. 84 No. 5 1994
A Solution to the Problem of Externalities When Agents Are Well-Informed
Abstract
I describe a class of simple two-stage mechanisms that implement efficient allocations as subgame-perfect equilibria for economic environments involving externalities. These mechanisms, known as compensation mechanisms, solve a wide variety of externalities problems including implementation of Lindahl allocations, regulation of monopoly, and efficient solutions to the prisoner's dilemma.
- Volume
- 84
- Issue
- 5
- Pages
- 1278-1293
- Sources
- bibtex:phds-export.bib