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Efficient provision of public goods with endogenous redistribution

Record type: Monograph (Discussion Paper)

We study a continuous and balanced mechanism that is capable of implementing in Nash equilibrium all the Pareto-efficient individually rational allocations for an economy with public goods. The Government chooses a set of weights directly related to the Lindahl prices corresponding to the Pareto-efficient allocation it wants to implement. The mechanism then guarantees that initial endowments are re-allocated so that the chosen vector of Lindahl prices is indeed a Lindahl equilibrium, and implements the corresponding Lindahl allocation.

Previously known mechanisms that implement the Lindahl correspondence do not allow the Government to choose which point on the Pareto frontier should be implemented, unless it can also redistribute initial endowments in the appropriate way. By contrast, in our case the Government directly controls the distribution of welfare in the economy.

Finally, besides being balanced and continuous, our mechanism is `simple'. Each agent has to declare a desired increase in the amount of public good, and a vector of redistributive transfers of initial endowments (across other agents).

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Citation

Anderlini, L. and Siconolfi, P. (1999) Efficient provision of public goods with endogenous redistribution , Southampton, UK University of Southampton (Discussion Papers in Economics and Econometrics, 9912).

More information

Published date: 1999

Identifiers

Local EPrints ID: 33147
URI: http://eprints.soton.ac.uk/id/eprint/33147
PURE UUID: e55bb164-4b4f-4d21-a5d9-d978c5f9ab87

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Date deposited: 05 Jul 2007
Last modified: 17 Jul 2017 15:53

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Contributors

Author: L. Anderlini
Author: P. Siconolfi

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