We develop a simple model in which individuals, who are differentiated by skill levels, freely choose location among different regions. In each region there is a local labor market that determines the wage and a local redistributive taxation that is exogenously determined. Equilibrium requires...

This paper analyzes the problem of designing mechanisms to implement efficient solutions in economies with externalities. We provide two simple mechanisms implementing the Pigouvian Social Choice Correspondence in environments in which coalitions can or cannot be formed. Copyright 1999 by...