strategic behavior and partial cost sharing abstract the main objects here are games in which players mainly compete but nonetheless collaborate on some subsidiary activities play assumes a two stage nature in that first stage moves presume coordination of some subsequent tasks specifically we consider instances where second stage coordination amounts to partial cost sharing anticipated and sustained as a core solution examples include regional cournot oligopolies with joint transportation we define and characterize equilibria and inquire about their existence

average cost pricing versus serial cost sharing an axiomatic comparison abstract a finite group of agents share a one output production function a cost sharing rule allocates the total cost among the users for every conceivable profile of output demands we investigate the space of possible cost sharing rules from an axiomatic perspective we provide two characterizations of average cost pricing one based on the axioms of additivity and monotonicity both with respect to the cost function and the other based on the axioms of additivity and a version of consistency we also provide a characterization of serial cost sharing based essentially on additivity and a free lunch axiom journal of economic literature classification numbers d63 d78 c79

efficient resource allocation on the basis of priorities many institutions allocate resources by non market mechanisms based on priorities in this paper we introduce a model of resource allocation on the basis of priorities and address the following questions is it possible to allocate resources on the basis of any priority structure if yes when can we do this pareto efficiently without creating incentives for manipulation and consistently across different groups of agents and resource levels we adopt a basic indivisible objects model with a finite number of object types and a finite quota of goods of each type some interesting examples are the determination of access to education allocation of graduate houses offices or tasks agents are assumed to have strict preferences over object types and remaining unassigned an assignment is an allocation of the objects to the agents such that every agent receives at most one object a rule associates an assignment to each preference profile we formalize a priority structure to be a collection of strict priority rankings of individuals indexed by the object types where i a j would be read as i has higher priority for object a than j we assume that the priority structure is exogenously fixed and allow the preferences of the agents to vary a rule is said to violate a priority of i for a if there is a preference profile under which i envies j who is assigned a and publication information econometrica 70 6 november 2002 2489 2497 the copyright to this article is held by the econometric society http www econometricsociety org it may be downloaded printed and reproduced only for personal or classroom use absolutely no downloading or copying may be done for or on behalf of any for profit commercial firm or other commercial purpose without the explicit permission of the econometric society for this purpose contact julie p gordon executive director of the society at jpg northwestern edu i would like to thank faruk gul wolfgang pesendorfer the co editor the four anonymous referees and the participants of the micro theory lunch seminar in princeton university for their comments and suggestions

the proportional solution for economies with both private and public ownership abstract we ask how should a planner whose job is to respect public ownership of some productive assets in conjunction with private ownership of some inputs allocate resources we call our proposal the proportional solution it is characterized by the requirement that the final allocation be pareto efficient and by the condition of equal returns to the use of privately owned inputs we discuss this idea in a publicly owned firm a cooperative and a common pool resource our main result is the existence of proportional solutions in general convex economies journal of economic literature classification numbers d50 d51 d62 l32 h23 h82 p13

global warming and the energy efficiency of spanish industry this paper uses a stochastic frontier production function model to analyze the energy efficiency of spanish industry we used minimum cost input demand equations as the reference in order to calculate the demand for electricity gas and other fuels on this basis we found that there is no inherent conflict between the objectives of achieving productive efficiency and reducing energy consumption indeed it is possible to reduce the industrial emissions of co2 by up to 29 4 by means of a bottom up energy efficiency policy however if the government wants firms to reduce their emissions even further then it would be necessary to implement some form of energy regulatory policy in this respect we estimate the cost of reducing co2 emissions by 20

inflexible rules in incentive problems in practice contracts involve standard terms or rules allowing for variations only under exceptional circumstances we develop a simple model in which optimal contracts display this feature even in the absence of transactions costs rules arise when an agent has countervailing incentives to misrepresent private information these incentives are created by endowing the agent with a critical factor of production ex ante applications in regulatory labor and legal settings

agent discretion and the choice of insurance marketing system this article argues that different insurance marketing organizations arise as a means to minimize the costs of correctly matching policyholder risks with insurance coverage when policyholders are easily sorted without sales agent participation in screening exclusive dealing will be the preferred marketing organization when agent information is important for risk placement independent agency may be preferred empirical support for our theory is obtained from analysis of compensation contracts and market shares of the different marketing forms exclusive dealers are found to be prevalent in relatively standardized homogeneous product lines and markets and their agents receive less profit based compensation than those of independent agency insurers these findings are consistent with our theory

an efficient and almost budget balanced cost sharing method for a convex technology c we characterize cost sharing games where the nash equilibrium demands maximize total surplus budget balance is possible if and only if c is polynomial of degree n 1 or less for general c the residual cost shares are balanced if at least one demand is null a characteristic property if the cost function is totally monotone a null demand receives cash and total payments may exceed actual cost the ratio of excess payment to efficient surplus is at most min 2logn 1 for power cost functions c a ap p 1 the ratio of budget imbalance to efficient surplus vanishes as 1np 1 for analytic cost functions the ratio converges to zero exponentially along a given sequence of users all asymptotic properties are lost if the cost function is not smooth

multi product serial cost sharing an incompatibility with the additivity axiom previous literature has shown that the serial cost sharing rule is endowed with a variety of desirable incentive and equity features by definition applications of this mechanism are essentially constrained to single service facilities we investigate difficulties that emerge when attempting to extend serial cost sharing to multi product environments in particular we show that such an extension is incompatible with the additivity axiom journal of economic literatureclassification numbers d63 c71

a progress report on marxian economic theory on the controversies in exploitation theory since okishio 1963 a progress report on marxian economic theory

technical inefficiency in manufacturing industries this article examines technical inefficiency of manufacturing industry in the united kingdom based on data for 19 023 establishments in 151 industries these data drawn from the annual census of production for 1977 have been used to estimate technical inefficiency in each industry by fitting translog stochastic frontier production functions and decomposing the residuals into two components one measuring inefficiency and the other unobservable random factors the work is the first step in a larger project to explain the sources of technical inefficiency and to compare efficiency between countries similar studies are currently taking place in australia the united states canada japan south korea and norway the first phase of estimation has been completed for the united states caves 1988 for the united kingdom green and mayes 1989 and australia harris 1989

uniform externalities two axioms for fair allocation abstract positive resp negative preference externalities say that an agent always prefers his actual welfare to his virtual welfare should other agents share his preferences resp prefers his virtual to his actual welfare negative group externalities say that an agent never prefers his actual welfare to his virtual welfare should he be the sole user of the resources these two axioms unify several familiar fairness properties and yield some new ideas as well in the division of unproduced commodities and the cooperative production of a private or a public good we also discuss their compatibility with no envy and resource monotonicity

fair allocation of disputed properties we model problems of allocating disputed properties as generalized exchange economies in which agents have preferences and claims over multiple goods and the social endowment of each good may not be sufficient to satisfy all individual claims in this context we investigate procedural and end state principles of fairness their implications and relations to do so we explore procedural allocation rules represented by a composition of a rights assignment mechanism to assign each profile of claims individual property rights over the endowment and walrasian or other individually rational exchange rule using variants of fairness based on no envy as end state principles we provide axiomatic characterizations of the three focal egalitarian mechanisms known in the literature on rationing problems as constrained equal awards constrained equal losses and proportional mechanisms our results are connected to focal contributions in political philosophy and also provide rationale for market based environ mental policy instruments such as cap and trade schemes and personal carbon trading and moral foundation for the three proposals to allocate ghg emission rights known as the equal per capita sharing the polluter pays principle and the equal burden sharing the victims pay principle

surplus sharing with a two stage mechanism in this article we consider environments where agents jointly produce a private output good by contributing privately owned resources an efficient outcome may not be realized due to strategic behavior and conflicting interests of the agents we construct a two stage mechanism building on a varian mechanism the modified mechanism ensures an equilibrium for a large class of preferences and guarantees the feasibility of outcomes

national research funding and energy efficiency evidence from the national science foundation of china abstract the enhancement of energy efficiency is crucial to saving energy and reducing pollution emissions increasing investment in basic research may promote innovative energy technologies that improve energy efficiency in this paper the authors employ a stochastic frontier analysis to evaluate the impact of government funded research programs on improving national energy efficiency using estimates of energy efficiency based on the shepherd energy distance function the analysis used panel data from 30 provinces in china over the 2006 2015 period using the number of research programs funded by the national natural science foundation of china nsfc as a proxy the results show that research funding has a significantly negative effect on energy inefficiency the average energy efficiency continually increased from 2006 to 2015 in china while the energy efficiency in the eastern region was higher than that in the central and western regions in most years moreover a robustness test further validates and supports these findings some policy implications are proposed based on the empirical results

incentive mechanism design for production economies with both private and public ownerships in this paper we dealwith the probl em of incentive mechanism design which yields efficient allocations for general mixed ownership economies when preferences individual endowments and coalition patterns among individuals are unknown to the planner we do so by doubly implementing the proportional solution for economies with any number of private sector and public sector commodities and any number of individuals as well as the coexistence of privately and publicly owned firms with general convex production possibility sets furthermore the mechanisms work not only for three or more agents but also for two agent economies journal of economic literature classification numbers c72 d61 d71 d82 2000 academic press

public ownership of the external world and private ownership of self liberal political philosophy represented classically by john locke and today by libertarians defends great inequality of economic outcome on the basis that people own themselves and are entitled to establish private property in the external world by virtue of that self ownership contemporary nonlibertarian political philosophers such as john rawls and ronald dworkin achieve their relatively egalitarian conclusion by effectively denying self ownership as a premise an alternative challenge to liberalism which does not take the radical starting point of denying self ownership is to declare that while certain rights to benefit by virtue of superior skill should be protected a degree of self ownership productive assets in the external world be viewed as publicly owned and not privately appropriable what allocation mechanisms on a space of possible economies satisfy axioms that are necessary to guarantee both private ownership of self and public or joint ownership of the external world we propose a

fictitious play property for games with identical interests abstract ann person game has identical interests if it is best response equivalent in mixed strategies to a game with identical payoff functions it is proved that every such game has the fictitious play property journal of economic literatureclassification numbers c72 c73

erratum to environmental determinants of cost sharing multiple cost sharing rules often coexist in seemingly identical environments we use shared irrigation costs as a context for examining the extent to which the structural environment explains cost sharing rule selection we find that environmental factors affecting irrigation costs and benefits as well as those determining irrigator distribution along the ditch have impressive explanatory power these results present some of the first formal empirical analysis of the manner in which structural features influence the actual cost sharing choices of economic agents moreover our results also suggest that previous axiomatic studies are reflective of real world cost sharing behavior

optimal cost sharing for capacitated facility location games abstract we consider cost sharing for a class of facility location games where the strategy space of each player consists of the bases of a player specific matroid defined on the set of resources we assume that resources have nondecreasing load dependent costs and player specific delays our model includes the important special case of capacitated facility location problems where players have to jointly pay for opened facilities the goal is to design cost sharing protocols so as to minimize the resulting price of anarchy and price of stability we investigate two classes of protocols basic protocols guarantee the existence of at least one pure nash equilibrium and separable protocols additionally require that the resulting cost shares only depend on the set of players on a resource we find optimal basic and separable protocols that guarantee the price of stability price of anarchy to grow logarithmically linearly in the number of players these results extend our previous results cf von falkenhausen harks 2013 where optimal basic and separable protocols were given for the case of symmetric matroid games without delays we finally study the complexity of computing optimal cost shares we derive several hardness results showing that optimal cost shares cannot be approximated in polynomial time within a logarithmic factor in the number of players unless p np for a restricted class of problems that include the above hard instances we devise an approximation algorithm matching the logarithmic bound

the competitive effects of exclusive dealing evidence from the u s beer industry abstract several recent theoretical articles have modeled the effects of exclusive dealing contracts that restrict dealers to selling a single brand yet detailed empirical analysis of the impact of exclusivity on actual market outcomes has been lacking i analyze a unique set of firm level data on nearly 400 beer distributors in the united states the impacts of economies of scale and restrictions on distributor promotional activities on the use of exclusive dealing are measured as well as the effects of exclusivity on costs prices and output the results support the view that exclusive dealing serves to minimize manufacturer dealer incentive conflicts and enhances social welfare

bargaining with an agenda gradual bargaining is represented by an agenda a family of increasing sets of joint utilities parameterized by time a solution for gradual bargaining specifies an agreement at each time we axiomatize an ordinal solution i e one that is covariant with order preserving transformations of utility it can be viewed as the limit of step by step bargaining in which the agreement of the last negotiation becomes the disagreement point for the next the stepwise agreements may follow the nash solution the kalai smorodinsky solution or many others and still yield the ordinal solution in the limit

the dynamics of inequalities and unequal exchange of labor in intertemporal linear economies abstract introducing a concept of fairness of economic allocations namely exploitation as the unequal exchange of labor henceforth ue exploitation by generalizing roemer s 1981 1982a seminal models this paper aims to answer the following two questions in the context of an intertemporal economy with linear technology how is income and wealth inequality related or unrelated to the existence and persistence of ue exploitation what are the mechanisms driving the persistent existence of ue exploitation in growing economies agents are ue exploited resp exploiters if the amount of labor that they contribute to the economy is bigger resp smaller than the amount of labor received by them via their income it is proved first that ue exploitation is monotonically correlated to functional income inequality second it is shown that unless agents discount the future asset inequalities are necessary but not sufficient for the persistence of ue exploitation and capital accumulation leading to the disappearance of ue exploitation cannot be ruled out in equilibrium third it is shown that regardless of whether agents discount the future labor saving technical progress may yield sustained growth with persistent ue exploitation by keeping labor abundant relative to capital which restrains wages from rising unlike in models with differentiable production functions this mechanism does not rely on changes in the marginal productivity of inputs and it is entirely driven by the interaction between innovation and labor markets

manipulation through bribes we consider allocation rules that choose outcomes and transfers based on agents reported valuations of the outcomes a bribing situation exists when one agent could pay another to misreport his valuations resulting in a net gain to both a bribe proof rule eliminates such opportunities we show that under a bribe proof rule each agent s payoff is a continuous function of other agents reported valuations furthermore on connected domains if the set of outcomes is finite or the domain is smoothly connected each agent s payoff is a constant function of other agents reports finally under a domain richness condition a bribe proof rule must be constant the results apply to a broad class of economies journal of economic literature classification numbers c70 d70

cost function estimation and quality bias the regulated automobile insurance industry this article explores the implications of endogenous product quality and therefore endogenous output in the empirical estimation of cost functions for regulated automobile collision insurance firms it contains a structural model of such a firm and provides an illustration of the types of biases that can result if data on quality of service are unavailable or otherwise omitted the analysis shows how the directions of biases depend on the nature of the variations in the observed nonquality data a new test suggests that such bias is present in insurance cost functions

ordinal cost sharing abstract we ask how the best known mechanisms for solving cost sharing problems with homogeneous cost functions the value proportional and serial mechanisms should be extended to arbitrary problems we propose the ordinality axiom which requires that cost shares should be invariant under essentially all increasing transformations of the measuring scales following thevalueapproach first we present an axiomatization of the shapley shubik rule based on ordinality next we define and axiomatize two extensions of theserialmechanism which contrary to the friedman moulin rule are ordinal finally we note that the aumann shapley extension of theproportionalmechanism is not ordinal we propose and defend an alternative proportional extension which does satisfy ordinality journal of economic literatureclassification numbers d63 c71

the tragedy of the commons revisited identifying behavioral principles abstract the theme of hardin s renowned the tragedy of the commons is that the common pool resource is dissipated to the level where the average value of extraction equals the wage rate in the long run when the number of appropriators is unlimited yet experimental results and rapid deforestation in tropical countries follow a contrasting pattern even though the number of appropriators is limited the common pool resource is dissipated more than the nash equilibrium predicts first given these market or experimental observations we identify two behavioral principles share maximization and difference maximization second we characterize these principles at nash equilibrium

adverse selection private information and lowballing in insurance markets recent contributions to the adverse selection literature have focused on a multiperiod competitive environment in this setting a clean distinction arises between the predictions of competing models cooper and hayes extend the model of rothschild and stiglitz to multiple periods the result is a self selecting equilibrium characterized by price highballing or systematically overcharging new business kunreuther and pauly suggest that information asymmetries between competing insurance firms render such price quantity policies infeasible their model results in a pooling equilibrium that is characterized by price lowballing or systematically undercharging new business our evidence is consistent with the kunreuther and pauly model and reveals the persistence of adverse selection in the automobile insurance market copyright 1990 by the university of chicago

strategyproof assignment by hierarchical exchange we give a characterization of the set of group strategyproof pareto optimal and reallocation proof allocation rules for the assignment problem where individuals are assigned at most one indivisible object without any medium of exchange although there are no property rights in the model the rules satisfying the above criteria imitate a trading procedure with individual endowments in which individuals exchange objects from their hierarchically determined endowment sets in an iterative manner in particular these assignment rules generalize gale s top trading cycle procedure the classical rule for the model in which each individual owns an indivisible good

implementation of balanced linear cost share equilibrium solution in nash and strong nash equilibria abstract this paper considers the incentive aspect of the balanced linear cost share equilibrium blcse which yields an endogenous theory of profit distribution for public goods economies with convex production technologies we do so by presenting an incentive compatible mechanism which doubly implements the blcse solution in nash and strong nash equilibria so that nash allocations and strong nash allocations coincide with blcse allocations the mechanism presented here allows not only preferences and initial endowments but also coalition patterns to be privately observed in addition it works not only for three or more agents but also for two agent economies

population monotonic allocation schemes for cooperative games with transferable utility abstract an allocation scheme for a cooperative game specifies how to allocate the worth of every coalition it is population monotonic if each player s payoff increases as the coalition to which he belongs grows larger we show that essentially a game has a population monotonic allocation scheme pmas if and only if it is a positive linear combination of monotonic simple games with veto control a dual characterization is also provided sufficient conditions for the existence of a pmas include convexity and increasing average marginal contributions if the game is convex its extended shapley value is a pmas classification number 026

environmental determinants of cost sharing abstract multiple cost sharing rules often coexist in seemingly identical environments we use shared irrigation costs as a context for examining the extent to which the structural environment explains cost sharing rule selection we find that environmental factors affecting irrigation costs and benefits as well as those determining irrigator distribution along the ditch have impressive explanatory power these results present some of the first formal empirical analysis of the manner in which structural features influence the actual cost sharing choices of economic agents moreover our results also suggest that previous axiomatic studies are reflective of real world cost sharing behavior

reward patterns of fair solutions abstract the solutions proposed in the literature on fair allocations are sensitive to the preference profiles of the agents as a consequence each of them displays a specific distribution pattern which may be interpreted as rewarding certain kinds of preferences at the expense of others in the basic models with private goods and decreasing returns the equal income competitive equilibrium tends to favor the eccentric preferences whereas most egalitarian equivalent solutions tend to reward the agents who like particular resources the identification of the rewarding pattern of each mechanism sheds light on its ethical content and may help select the adequate solution in concrete applications in this analysis a preference monotonicity property turns out to be satisfied by many solutions

is shapley cost sharing optimal abstract a general approach to the design of budget balanced cost sharing mechanisms is to use the shapley value applied to the given cost function to define payments from the players to the mechanism is the corresponding shapley value mechanism optimal in some sense we consider the objective of minimizing worst case inefficiency subject to a revenue constraint and prove results in three different regimes first for the public excludable good problem the shapley value mechanism minimizes the worst case efficiency loss over all truthful deterministic and budget balanced mechanisms that satisfy equal treatment second even with randomization and approximate budget balance allowed and dropping equal treatment the worst case efficiency loss of the shapley value mechanism is within a constant factor of the minimum possible third for no deficit mechanisms we prove a general positive result for every monotone cost function a suitable blend of the vcg and shapley value mechanisms is no deficit and enjoys good approximate efficiency guarantees

joint ownership of a convex technology comparison of three solutions a given set of agents jointly own and operate a decreasing returns to scale technology with a single input and a single output they all contribute some input and receive some of the output what first best allocation is equitable we discuss three allocation mechanisms the equal benefits solution gives every agent the same benefit computed at the supporting price the equal returns solution equalizes returns output shares input contributions across agents the constant returns equivalent solution gives every agent his indirect utility level at some common price of output relative to input a lower and an upper bound on individual welfares play a key role in these axiomatic characterisation results

dairy farm efficiency measurement using stochastic frontiers and neoclassical duality this paper presents a stochastic efficiency decomposition model based on kopp and diewert s deterministic methodology the stochastic model is used to analyze technical economic and allocative efficiency for a sample of new england dairy farms the results suggest that mean economic efficiency for the farmers in the sample is about 70 and that on average there is little difference between technical 83 0 and allocative 84 6 efficiency analyses of the relationship between efficiency and four socioeconomic variables farm size education extension and experience reveal that despite some statistically significant associations efficiency levels are not markedly affected by these variables

individual rationality and voting in cooperative production abstract suppose that a group of individuals owns collectively a technology which produces a consumption good from an input a sharing rule associates input contributions with a vector of consumption we consider sharing rules that are a convex combination of the proportional the equal share and the equal benefit rules we characterize the subset of sharing rules that satisfy pareto efficiency and individual rationality we also study the outcome of majority voting on this subselection of sharing rules

on the endogenous determination of the degree of meritocracy in large cooperatives abstract we consider a cooperative formed by a large number of workers differentiated by their initial endowment of wealth which is both primary input labor and consumption leisure the cooperative is characterized by its wealth distribution and produces a consumption good from labor which allocates among workers according to a convex combination of the proportional and the egalitarian rule in the first stage workers decide this combination by simple majority in a second stage they choose how much labor to provide to the cooperative we find that when in the cooperative s wealth distribution the median wealth is lower higher than the average the degree of meritocracy chosen by workers is lower higher than that of the optimum and coincides with it when both statistics coincide this choice has similar consequences on the cooperative s labor output since it increases with respect to the degree of meritocracy

group strategyproof cost sharing the role of indifferences every agent reports his willingness to pay for one unit of a good a mechanism allocates goods and cost shares to some agents we characterize the group strategyproof gsp mechanisms under two alternative continuity conditions interpreted as tie breaking rules with the maximalist rule max an indifferent agent is always served with the minimalist rule min an indifferent agent does not get a unit of the good gsp and max characterize the cross monotonic mechanisms these mechanisms are appropriate whenever symmetry is required on the other hand gsp and min characterize the sequential mechanisms these mechanisms are appropriate whenever there is scarcity of the good our results are independent of an underlying cost function they unify and strengthen earlier results for particular classes of cost functions

kantian optimization a microfoundation for cooperation abstract although evidence accrues in biology anthropology and experimental economics that homo sapiens is a cooperative species the reigning assumption in economic theory is that individuals optimize in an autarkic manner as in nash and walrasian equilibrium i here postulate a cooperative kind of optimizing behavior called kantian it is shown that in simple economic models when there are negative externalities such as congestion effects from use of a commonly owned resource or positive externalities such as a social ethos reflected in individuals preferences kantian equilibria dominate the nash walras equilibria in terms of efficiency while economists schooled in nash equilibrium may view the kantian behavior as utopian there is some perhaps much evidence that it exists if cultures evolve through group selection the hypothesis that kantian behavior is more prevalent than we may think is supported by the efficiency results here demonstrated

on the uniqueness of equilibrium in cournot oligopoly and other games abstract in an average surplus sharing game such as a cournot oligopoly a group of agents share a production process each contributes an amount of input to the process and output is divided in proportion to the amount of input contributed uniqueness of the equilibrium is needed for any type of comparative static analysis however general uniqueness results for concave games have restrictive assumptions on preferences and technology specifically the conditions needed for uniqueness become more difficult to meet as the number of players increases a new theorem for uniqueness with easily interpretable conditions is given which is independent of the number of players journal of economic literature classification numbers c70 c72 d43

exclusive vs independent agents a separating equilibrium approach abstract we provide a separating equilibrium explanation for the existence of the independent insurance agent system despite the potentially higher costs of this system compared to those of the exclusive agents system or direct underwriting a model is developed assuming asymmetric information between insurers and insureds the former do not know the riskiness of the latter we also assume that the claims service provided by the independent agent system to its clients is superior to that offered by direct underwriting system that is insureds using the independent agent system are more likely to receive reimbursement of their claims competition compels the insurers to provide within their own system the best contract to the insured it is shown that in equilibrium the safer insureds choose direct underwriting whereas the riskier ones choose independent agents the predictions of the model agree with previous research demonstrating that the independent agent system is costlier than direct underwriting the present model suggests that this does not result from inefficiency but rather from self selection the empirical implication of this analysis is that ceteris paribus the incidence of claims made by clients of the independent agents system is higher than that of clients of direct underwriting implications for the coexistence of different distribution systems due to unbundling of services in other industries such as brokerage houses and the health care industry are discussed

modularity and greed in double auctions abstract designing double auctions is a complex problem especially when there are restrictions on the sets of buyers and sellers that may trade with one another the goal of this paper is to develop a modular approach to the design of double auctions by relating it to the exhaustively studied problem of designing one sided mechanisms with a single seller or alternatively a single buyer we consider several desirable properties of a double auction feasibility dominant strategy incentive compatibility the still stronger incentive constraints offered by a deferred acceptance implementation exact and approximate welfare maximization and budget balance for each of these properties we identify sufficient conditions on two one sided algorithms one for ranking the buyers one for ranking the sellers and on a method for their composition into trading pairs which guarantee the desired property of the double auction our framework also offers new insights into classic double auction designs such as the vcg and mcafee auctions with unit demand buyers and unit supply sellers

some properties of egalitarian economies abstract it is argued that in strictly egalitarian economies there is an equilibrium in which social well being is maximized and that this is so whatever the nature of returns to scale and whether or not the economy is characterized by elements of monopoly externalities of consumption or production commodity taxes or subsidies or the private provision of public goods as a corollary the implications of distortions and increasing returns can be effectively studied only in a context of inequality

decreasing serial cost sharing under economies of scale we consider the problem of cost sharing in the presence of increasing returns to scale and potential strategic behavior on the part of consumers we show that any smooth and strictly monotonic mechanism for which a nash equilibrium exists for all profiles of convex and monotonic preferences must be dictatorial however we propose a cost sharing mechanism the decreasing serial mechanism for which an interesting domain restriction ensures existence of a noncooperative equilibrium for its cost sharing game a characterization theorem of the mechanism based on the strategic properties of existence uniqueness and efficiency of its noncooperative equilibrium is provided journal of economic literature classification numbers c70 c72 d70 cost allocation is a practical problem that organizations of all kinds face universities allocate computing costs among departments aviation authorities set landing fees for aircraft based on their size regulatory com missions set rates for electricity water and other utilities based on the costs of providing these services the common feature in all of these exam ples is that prices are not determined externally by market forces but are set internally by mutual agreement or administrative decision a simple situation where a cost sharing problem can emerge is when a set of users share a technology that transforms a single input into a single output we study this cost sharing problem when the cost function is increasing and concave examples include the division of costs incurred in setting telephone lines or a water supply system the assessment of fees to pay for a secretary or a gardener s services and so on the situations we have in mind are those of cooperative production or natural nonregulated monopolies for either of these situations there is no obvious answer to the question of how to divide the cost of producing the total output among the users

coalitional strategy proof house allocation abstract we consider house allocation without endowments we show that there is a unique maximal domain including all strict preferences on which efficiency and coalitional strategy proofness are compatible a preference relation belongs to the unique maximal domain if it is a strict descending ranking of houses to a certain house and indifference holds over it and the remaining houses we also show that on this domain mixed dictator pairwise exchange rules are the only rules satisfying efficiency and coalitional strategy proofness journal of economic literature classification numbers c78 d63 d71

equality of resources implies equality of welfare if one is an egalitarian should one try to equalize resources available to agents or to equalize their welfares with a suitably general conception of what resources are these two conceptions cannot be distinguished an allocation mechanism is defined on a space of economies and is required to satisfy various axioms that are necessary conditions for equalizing resources among a population the unique mechanism satisfying these axioms on a large domain of economies is the one that allocates commodities so as to equalize utilities of the agents methodologically the theorem is a generalization of bargaining theory because the mechanisms are defined on commodity space

characterizations of bargaining solutions in production economies with unequal skills in production economies with unequal skills this paper characterizes bargaining solutions by using axioms on allocation rules rather than axioms on classical bargaining solutions we introduce a new axiom consistency w r t technological innovations so that the non welfaristic characterizations of bargaining solutions in the production economies are provided by the characterizations we can classify the three bargaining solutions the nash the kalai smorodinsky and the egalitarian solutions from the viewpoint of responsibility and compensation discussed by dworkin

the determination of marginal cost prices under a set of axioms the main purpose of this paper is to provide an axiomatic approach to marginal cost mc pricing and to point out its similarity with aumann shapley a s pricing the latter is a cost sharing price mechanism discussed in 3 and 6 that is derived from a set of five natural axioms in this paper we consider models in which there is one producer with a given technology who faces fixed input prices and produces a finite number of consumption goods thus we can uniquely derive the cost function that describes the minimal cost of producing a given vector of consumption goods by a price mechanism p we mean a rule or a function that associates with each cost function f and vector a of quantities a vector of prices

egalitarian equivalent cost sharing of a public good in an economy with one public and one private good egalitarian equivalent cost sharing consists of finding the highest public good level x such that consuming x for free yields a feasible utility distribution the corresponding feasible allocation typically unique called egalitarian equivalent is in the core of the economy conversely any cost sharing method satisfying pareto optimality cost monotonicity nobody suffers a utility loss if the production technology improves upon ceteris paribus and individual rationality no single agent coalition objects or no private transfers no agent receives a positive amount of private good must select an egalitarian equivalent allocation in every economy copyright 1987 by the econometric society

nash implementation of a proportional solution to international pollution control problems abstract for a very general class of pollution control models involving strictly quasi concave utility functions over consumption and environmental quality and strictly convex emission abatement cost functions a proportional cost sharing mechanism is presented inspired by the ratio equilibrium introduced by 7 it is shown that the proportional solution yields a cost efficient allocation of abatement efforts and that the resulting utility imputation always lies in the stand alone core of the cost sharing game in order to decentralize the proportional cost sharing equilibrium a financial compensation mechanism implementing the proportional solution in complete information nash equilibrium is presented

environmental efficiency and abatement cost of china s industrial sectors based on a three stage data envelopment analysis abstract china has gained the reputation of global factory due to its phenomenal industrial growth over the past decades at the same time its industrial energy consumption has resulted in serious environmental problems accordingly there is an urgent and critical need to reduce industrial carbon emissions at a minimum cost without hampering the country s economic development the dual targets for carbon emission intensity and amount from the 12th five year 2011 2015 plan make it necessary to investigate the environmental efficiency and reduction costs of different sectors this study employs a three stage data envelopment analysis model based on a directional distance function approach with radial and non radial slacks of desirable and undesirable outputs considered to measure the environmental efficiency and marginal co2 emission abatement costs of china s 37 two digit industries during 2005 2014 based on the environmental efficiency and abatement cost of the industrial sectors we reached the following conclusions first the adjusted estimates differ significantly from the results that do not consider the influence of environmental factors and it is essential to consider the heterogeneity of industries in proposing emission reduction strategies in addition the stimuli for the smelting and pressing of metal industries result in cost reduction and the supervision on the top nine emitters and the equipment manufacturing industries should be strengthened finally the industrial sectors with large abatement potential are classified into short term and long term key target industries according to the emission abatement cost analyses

stock versus mutual ownership structures the risk implications this article provides empirical tests of the risk differences between two types of ownership structure in the property liability insurance industry empirical evidence is provided that suggests stock insurers have more risk than mutuals where the risk inherent in future cash flows is proxied by the variance of the loss ratio further evidence suggests that stock insurers write relatively more business than do mutuals in lines and states having higher risk copyright 1993 by university of chicago press

energy efficiency in swedish industry a firm level data envelopment analysis this paper assesses energy efficiency in swedish industry using unique firm level panel data covering the years 2001 2008 the efficiency estimates are obtained for firms in 14 industrial sectors by using data envelopment analysis dea the analysis accounts for multi output technologies where undesirable outputs are produced alongside with the desirable output the results show that there was potential to improve energy efficiency in all the sectors and relatively large energy inefficiencies existed in small energy use industries in the sample period also we assess how the eu ets the carbon dioxide co2 tax and the energy tax affect energy efficiency by conducting a second stage regression analysis to obtain consistent estimates for the regression model we apply a modified input oriented version of the double bootstrap procedure of simar and wilson 2007 the results of the regression analysis reveal that the eu ets and the co2 tax did not have significant influences on energy efficiency in the sample period however the energy tax had a positive relation with the energy efficiency

welfare bounds in the cooperative production problem a general model of lower bound individual rationality and upper bound axioms for fair allocation is proposed the unanimity welfare function associates to each individual utility function the highest equal utility feasibile when all agents share this utility if this function is a feasible lower bound resp upper bound then it is the highest lower bound of all resp the lower upper bound applying this to cooperative production of private goods we characterize when the unanimity welfare is a lower upper bound function and when the stand alone welfare is an upper or lower bound our approach unifies several familiar fairness properties

a ricardian model of the tragedy of the commons abstract this paper revisits the tragedy of the commons when agents have different capabilities in both production and encroachment activities and can allocate their time between them under fairly general assumptions on production and encroachment technologies an individual s expected income is convex with respect to his actions so that individuals specialize consequently in equilibrium the economy is divided into at most two homogenous groups encroachers and producers the partition obeys a relative advantage criterion several equilibria may exist the tragedy of the commons equilibrium without production always does the pareto optimal allocation of activities may not be an equilibrium we show that minute changes in property right enforcement may lead to drastic improvements for society we argue that in convex games such as this paper s role choice game bounded rationality is a natural assumption and the concept of local nash equilibrium is the natural analytical tool to handle it

a progress report on marxian economic theory on the controversies in exploitation theory since okishio 1963 this report explores the development of exploitation theory in mathematical marxian economics by reviewing the main controversies surrounding the proper definition of exploitation since the contribution of okishio the report first examines the debates on the fundamental marxian theorem and class exploitation correspondence principle developed mainly in the 1970s and 1980s followed by the property relation theory of exploitation by roemer then the more recent exploitation theory proposed by vrousalis and wright is introduced finally the report introduces and comments on recent axiomatic studies of exploitation by focusing on the work of veneziani and yoshihara

a proposal to unify some concepts in the theory of fairness so far the theory of distributive justice has tried to single out a unique criterion of justice in our opinion we live in a world in which different people hold conflicting ideas about justice we propose a procedure for representing these individual opinions by means of what we call aspiration functions and we present in this paper three different ways of aggregating such opposing opinions into a socially acceptable judgement furthermore we show that many well known concepts are special cases of our approach we study under a restriction on the form of the aspiration functions the conditions that are necessary and sufficient for a social choice correspondence to be generated from any of our concepts

majoritarian management of the commons yong j yoon this article analyzes usage of a common property resource the commons under collectivization as compared with more familiar privatization institutional arrangements particular emphasis is on majority decision rules when separate majority coalitions may authorize simultaneous usage of a common resource total value is dissipated but the interdependencies introduced by possible membership in differing coalitions to an extent reduce the incentives for exploitation the formal analysis is analogous to that familiar in cournot nash duopoly oligopoly models but with differing efficiency implications the argument has relevance for differential benefit public spending from general tax sources as well as other applications jel d7 h00 02 i introduction the operation and management of common property resources the commons have been exhaustively examined in economics and political science both in formal analyses and in practical application 1 however the full range of institutional alternatives has not been covered even at a level of stylized interaction models our purpose in this article is to fill in at least some of the gaps here and specifically to examine the predicted results that emerge when usage decisions are collectivized under majoritarian voting rules to our knowledge this analysis has not been undertaken we shall in section ii first summarize the classic analysis along with the familiar institutional reform suggested as a solution to the tragedy this solution privatization is analyzed under several institutional variants in section iii we then shift attention in section iv to arrangements under which usage of the commonly shared resource or facility is chosen by some predesignated collective decision rule specifically we concentrate analysis on the predicted results in several majority rule environments we analyze thoroughly the case in which different majority coalitions make usage decisions separately and simultaneously the analysis incorporates recognition on the part of any member of a specific majority of the prospect for membership in alternative majority coalitions we demonstrate that instead of full dissipation the level of usage that emerges in the limit is structurally analogous to the outcome in the cournot nash duopoly model even if the efficiency implications differ in the two settings ii the classic model summarized the familiar tragedy of the commons lends itself to stylized illustration an immobile but renewable resource exists a common pasture aquifer fishing ground and has economic value if used effectively through the application of units of complementary mobile resources that are themselves valued in their alternative market opportunities there are no assigned ownership rights to the immobile resource or facility free and open access may dissipate most or even all of the potential value consider figure 1 the productivity of mobile complementary resource units as applied elsewhere in the economy e g steers grazed on the open range beyond the commons is set at w a value assumed constant the quantity of such inputs applied on the commonly used facility is measured along the abscissa in figure 1 the marginal and average productivity curves for the units of applied complementary resource are shown as mp and ap total value is maximized when q sub m units are applied at which point marginal product values are equalized as between this usage and other opportunities the maximal value of the commonly used resource is the area under the mp curve above w if entry to usage is open and if the institutional structure is such as to allow for decentralized decisions on the part of many potential users rational choices made separately will generate a full behavioral equilibrium at q sup where average product per unit of the complementary resource is equalized as between the commons and other uses

the coexistence of distribution systems under price search theory and some evidence from insurance abstract this paper analyzes a pure price search model of an insurance market in which two different search technologies are simultaneously available sequential search and nonsequential search sequential search characterizes firms that sell directly to consumers and nonsequential search characterizes firms who use independent agents that sell the products of a number of different firms the separation of firms and consumers into the two market sectors is endogenously determined and the conditions for equilibrium coexistence are derived the characteristics of price distributions in the two sectors are then compared in a coexistence equilibrium price distributions observed in automobile insurance markets are found to be consistent with the predictions of the theoretical model

the evolution of social norms in common property resource use the problem of extracting commonly owned renewable resources is examined within an evolutionary game theoretic framework it is shown that cooperative behavior guided by norms of restraint and punishment may be stable in a well defined sense against invasion by narrowly self interested behavior the resource stock dynamics are integrated with the evolutionary game dynamics effects of changes in prices technology and social cohesion on extraction behavior and the long run stock are analyzed when threshold values of the parameters are crossed social norms can break down leading generally to the lowering of the long run stock and possibly to its extinction copyright 1996 by american economic association

beyond moulin mechanisms abstract the only known general technique for designing truthful and approximately budget balanced cost sharing mechanisms with good efficiency or computational complexity properties is due to moulin 1999 incremental cost sharing characterization by coalition strategy proofness soc choice welfare 16 2 279 320 for many fundamental cost sharing applications however moulin mechanisms provably suffer from poor budget balance poor economic efficiency or both we propose acyclic mechanisms a new framework for designing truthful and approximately budget balanced cost sharing mechanisms acyclic mechanisms strictly generalize moulin mechanisms and offer three important advantages first it is easier to design acyclic mechanisms than moulin mechanisms many classical primal dual algorithms naturally induce a non moulin acyclic mechanism with good performance guarantees second for important classes of cost sharing problems acyclic mechanisms have exponentially better budget balance and economic efficiency than moulin mechanisms finally while moulin mechanisms have found application primarily in binary demand games we extend acyclic mechanisms to general demand games a multi parameter setting in which each bidder can be allocated one of several levels of service