A Solution to the Problem of Externalities When Agents Are Well-Informed.

The author describes 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. Copyright 1994 by American Economic Association.

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Year of publication:	1994
Authors:	Varian, Hal R
Published in:	American Economic Review. - American Economic Association - AEA. - Vol. 84.1994, 5, p. 1278-93
Publisher:	American Economic Association - AEA

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Extent:	application/pdf
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005571824