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A Simple Supermodular Mechanism that Implements Lindahl Allocations

By Matthew J. Van Essen

Abstract

This paper introduces a new incentive compatible mechanism which for general preference environments implements Lindahl allocations as Nash equilibria. The mechanism does not increase in structural complexity as consumers are added to the economy, the minimum dimension of data needed to compute payoffs is smaller than other mechanisms with comparable properties; and for quasi-linear environments, the mechanism induces a supermodular game for appropriate choices of the mechanism parameters. Thus, this new Lindahl mechanism provides a connection between the desirable welfare properties of Lindahl allocations and the desirable theoretical/ convergence properties of supermodular games.

Topics: H21 - Efficiency; Optimal Taxation, D02 - Institutions: Design, Formation, and Operations, C62 - Existence and Stability Conditions of Equilibrium, C72 - Noncooperative Games
Year: 2008
DOI identifier: 10.1111/jpet.12028
OAI identifier: oai:mpra.ub.uni-muenchen.de:12781

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