the problem of multiple commons a market design approach abstract there are several locations each of which is endowed with a resource that is specific to that location each agent will go to a single location and harvest some of the resource there several agents may go to each location and thereby cause a congestion effect that is modeled in a general way we assign harvesting rights based on preferences alone though we later extend the model to accommodate private endowments of money we find the best allocation rule in the class of rules that are strategy proof anonymous and that satisfy a weak continuity property for a special class of preferences we also find an ascending mechanism similar to an auction that implements the rule the rule coincides with a special pseudo market equilibrium wherein agents buy their desired resource with tokens distributed by the social planner

constrainedly fair job assignments under minimum wages a number of jobs are to be assigned to a greater number of workers while having to abide by the law of minimum wages firms must determine who should be assigned which job and at what salary in such situations fair envy free allocations usually fail to exist to cope with this situation this paper proposes a new concept of fairness called constrained fairness among the set of constrainedly fair allocations the so called constrainedly fair and minimal allocations are of particular interest the reason for this is that the salaries are not only compatible with the minimum wages they are also optimal from the standpoint of cost minimizing firms and the assignment of jobs is efficient from the viewpoint of workers a convergent dynamic procedure that identifies constrainedly fair and minimal allocations is proposed furthermore strategic properties of the mechanism are derived and two notions of efficiency are evaluated

applied fairness theory comment william baumol 1982 presented a provocative and potentially valuable piece of analysis on fairness but his contribution suffers from the flaw of defining terms in a manner similar to but with important differences from their common definitions as a result of this terminological problem it would be possible for a real world outcome to be fair or even superfair according to baumol s criteria but to be unfair according to the commonly accepted meaning of the word conversely what would commonly be accepted as fair in the real world might not be fair according to baumol s criteria my objection here is largely with baumol s terminology but its significance extends well beyond terminology because it affects the way economists think about equity issues ranging from the particular case of fairness theory to welfare economics in general the remarks that follow fall into two categories first i argue that it is unfair in the traditional meaning of the word for baumol to redefine the meaning of fair second i argue that fair outcomes can only be judged within the context of the institutional setting that produces the outcomes as a result any analysis like baumol s which examines only the outcome of a process without examining the process itself can never determine whether an outcome is fair

using stochastic frontier analysis to measure the impact of weather on the efficiency of electricity distribution businesses in developing economies abstract this paper analyses the influence of weather variables on the efficiency of electricity distribution companies in argentina brazil chile and peru covering 82 firms which represent more than 90 percent of the distribution market of energy delivered for the period 1998 2008 stochastic frontier analysis sfa is applied using a translog input distance function two different approaches are evaluated weather in the production function and weather in the inefficiency term the efficacy of one over the other is determined using nested models weather data are collected from meteorological stations 429 and nasa 3423 coordinates a geographic information system gis is used for locating the firms service areas and their weather conditions a combination of cost only and cost quality models is proposed for cost only models the results suggest that on average there is a significant increase in measured efficiency when weather is incorporated in the production function under the cost quality models on average the effect of weather is much lower this suggests that firms have internalised the effects of weather and have adapted their networks to the environment in which they operate a company level analysis indicates that across models a significant number of companies are affected by weather regulators are advised to make proper adjustments of efficiency scores when specific firms face important efficiency changes due to weather

quality competition and threat of entry in duopoly abstract threat of entry sequential entry and cost of production are taken into account in a duopoly game in quality within the vertical product differentiation framework a multi stage perfect equilibrium solution is shown to exist and is fully characterized

efficiency and environmental factors in the us electricity transmission industry the electricity industry in most developed countries has been restructured over recent decades with the aim of improving both service quality and firm performance regulated segments e g transmission still provide the infrastructure for the competitive segments and represent a significant share of the total price paid by final customers however there is a lack of empirical studies that analyse firms performance in the electricity transmission sector in this paper an empirical analysis of us electricity transmission companies is conducted for the period 2001 2009 we use alternative stochastic frontier models that allow us to identify the determinants of firms inefficiency these models also permit us to control for weather conditions potentially one of the most decisive uncontrollable factors in electricity transmission our results suggest that weather conditions clearly have an influence on transmission costs and that there is room for improvement in the management of us electricity transmission systems regulators should also be aware that more adverse conditions generate higher levels of inefficiency and that achieving long term efficiency improvements tends to worsen firms short term relative performance

characterizations of pareto efficient fair and strategy proof allocation rules in queueing problems a set of agents with possibly different waiting costs have to receive the same service one after the other efficiency requires to maximize total welfare fairness requires to treat equal agents equally one must form a queue set up monetary transfers to compensate agents having to wait and not a priori arbitrarily exclude agents from positions as one may not know agents waiting costs they may have no incentive to reveal them we identify the only rule satisfying pareto efficiency equal treatment of equals in welfare or symmetry and strategy proofness it satisfies stronger axioms as no envy and anonymity further its desirability extends to related problems to obtain these results we prove that a rule single valued or not satisfies queue efficiency and strategy proofness if and only if it always selects efficient queues and sets transfers a la groves groves t 1973 incentives in teams econometrica 41 617 631 this holds in other problems provided the domain of quasilinear preferences is rich enough

are incentives against economic justice abstract we consider the problem of fairly allocating a social endowment of indivisible goods and money when the domain of admissible preferences contains but is not restricted to quasi linear preferences we analyze the manipulability of the generalized money rawlsian fair gmrf solutions i we show that the nash and strong nash equilibrium correspondences of the preference revelation game form associated with each gmrf solution coincide with the no envy solution in equilibrium efficiency is preserved according to agents true preferences ii a corollary is that the gmrf solutions naturally implement the no envy solution in nash and strong nash equilibria

social orderings for the assignment of indivisible objects in the assignment problem of indivisible objects with money we study social ordering functions which satisfy the requirement that social orderings should be independent of changes in preferences over infeasible bundles we combine this axiom with efficiency consistency and equity axioms our result is that the only social ordering function satisfying those axioms is the leximin function in money utility

maximal manipulation of envy free solutions in economies with indivisible goods and money abstract we consider the problem of the fair allocation of indivisible goods and money with non quasi linear preferences the purpose of the present study is to examine strategic manipulation under envy free solutions we show that under a certain domain richness condition each individual obtains the welfare level of his optimal envy free allocation by maximally manipulating the solutions this maximal manipulation theorem is helpful in analyzing the set of nash equilibrium allocations in the direct revelation games associated with a given envy free solution if an envy free solution satisfies a mild condition the set of nash equilibrium allocations in its associated direct revelation game coincides with that of envy free allocations

transferring ownership of public housing to existing tenants a market design approach this paper explores a housing market with an existing tenant in each house and where the existing tenants initially rent their houses the idea is to identify equilibrium prices for the housing market given the prerequisite that a tenant can buy any house on the housing market including the one that he is currently possessing or continue renting the house he is currently occupying the main contribution is the identification of an individually rational equilibrium selecting and group non manipulable price mechanism in a restricted preference domain that contains almost all preference profiles in this restricted domain the identified mechanism is the minimum price equilibrium selecting mechanism that transfers the maximum number of ownerships to the existing tenants we also relate the theoretical model and the main findings to the u k housing act 1980 whose main objective is to transfer ownerships of houses to existing tenants

a dynamic stochastic frontier model to evaluate regional financial efficiency evidence from chinese county level panel data abstract studies have widely used stochastic frontier models to assess financial efficiency however traditional static approaches do not take dynamic characteristics of financial systems into account this article develops a dynamic stochastic frontier model to evaluate regional financial efficiency and provides an empirical test of the model by using panel data of 62 chinese counties during the 2001 2010 period the model measures the dynamic impact of the input output variables and environmental variables on financial efficiency and allows for the separation of technical change from the change in technical efficiency the results show that the dynamic model provides a better fit to the data than the static model in addition a gradient difference emerges in the regional financial efficiency among the six major regions of china the results offer practical implications for the development of regional financial services in china as well as other developing countries and emerging economies

estimating the marginal cost of quality improvements the case of the uk electricity distribution companies the main aim of this paper is to develop an econometric approach to estimation of marginal costs of improving quality of service we implement this methodology by way of applying it to the case of the uk electricity distribution networks the estimated marginal costs allow us to shed light on the effectiveness of the current uk incentive regulation to improve quality and to derive optimal quality levels and welfare losses due to sub optimal quality levels the proposed method also allows us to measure the welfare effect of the observed quality improvements in the uk between 1995 and 2003 our results suggest that while the incentive schemes established by the regulator to encourage utilities to reduce network energy losses leads to improvement in sector performance they do not provide utilities with sufficient incentives to avoid power interruptions we find that the observed improvements in quality during the period of this study only represented 30 of the potential customer welfare gains and hence there was still significant scope for quality improvements

coalition formation in games of fair division abstract i consider economies with a single indivisible good and money allowing agents to form coalitions i show that the set of equilibrium allocations in the manipulation game associated with any subcorrespondence of the no envy correspondence coincides with the set of envy free allocations for the true preference profile

house allocation with transfers we consider the shapley scarf house allocation problem where monetary transfers are allowed we characterize the class of mechanisms that are strategy proof ex post individually rational ex post budget balanced and collusion proof in these mechanisms the price of each object is fixed in advance and the objects are reallocated according to the unique core assignment of the shapley scarf economy associated with the prices the special case in which all prices are zero is the core mechanism studied by shapley and scarf our mechanisms are compelling alternatives to the groves mechanisms which satisfy neither budget balance nor our condition of collusion proofness journal of economic literature classification numbers c71 c78 d71 d78 d89

productivity and efficiency estimation a semiparametric stochastic cost frontier approach this paper proposes a flexible stochastic cost frontier panel data model where the technology parameters are unknown smooth functions of firm and time effects which non neutrally shift the cost frontier the model decomposes inefficiency into firm and time specific components and productivity change into inefficiency change technical change and scale change we then apply the proposed methodology to the norwegian salmon production data and analyze technical efficiency as well as productivity changes

fair income tax fairness is a key concept in redistribution issues in this paper we study how particular requirements of fairness can shed light on the design of the optimal income tax schedule we consider a population of heterogeneous individuals or households who differ in two respects first they have unequal skills and therefore unequal earning abilities second they differ in terms of their preferences about consumption and leisure and as a consequence typically make different labour time choices both kinds of differences generate income inequalities we study how to justify and compute a redistribution income tax in this context redistribution through an income tax usually entails distortions of incentives but the resulting efficiency loss has to be weighed against potential improvements in the fairness of the distribution of resources we address this efficiency equity trade off here by constructing social preferences which obey the standard pareto principle in addition to fairness conditions

is commodity taxation unfair abstract in a model where agents have unequal skills and heterogeneous preferences about consumption goods and leisure this paper studies how to combine commodity taxes and non linear income tax it proposes a particular social welfare function on the basis of fairness principles it then derives a simple criterion for evaluating the social welfare consequences of various tax schedules under the proposed approach the optimal tax should have no commodity tax for some range of consumptions and income redistribution would feature high subsidies to the working poor it is also shown that even when the income tax fails to be optimal commodity taxes may not improve social welfare

sequential rules for house allocation with price restrictions this paper considers a housing market with price restrictions on such markets the existence of a unique minimum rationing equilibrium price vector has been established for each preference profile on a general preference domain that contains almost all preference profiles this vector can be used as a key ingredient in a direct and strategy proof allocation mechanism the main contribution of this paper is to provide two price sequences one with increasing prices and one with decreasing prices that both terminate to a minimal rationing equilibrium price vector in a finite number of steps these sequences are demonstrated to play key roles in an english auction and a dutch auction respectively for the considered housing market with price restrictions less

pareto principles from inch to ell abstract under mild conditions including the possibility of compensation by monetary transfer this paper shows that all versions of the pareto principle viz the pareto indifference the weak pareto the strong pareto and the full pareto are in fact mutually equivalent

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

benchmarking and incentive regulation of quality of service an application to the uk electricity distribution networks abstract quality of service has emerged as an important issue in post reform regulation of electricity distribution networks regulators have employed partial incentive schemes to promote cost saving investment efficiency and service quality this paper presents a quality incorporated benchmarking study of the electricity distribution utilities in the uk between 1991 92 and 1998 99 we calculate technical efficiency of the utilities using data envelopment analysis technique and productivity change over time using quality incorporated malmquist indices we find that cost efficient firms do not necessarily exhibit high service quality and that efficiency scores of cost only models do not show high correlation with those of quality based models the results also show that improvements in service quality have made a significant contribution to the sector s total productivity change in addition we show that integrating quality of service in regulatory benchmarking is preferable to cost only approaches

envy freeness and distributive justice the criterion of envy freeness according to which no agent should prefer any of his neighbours allocation to his own has become a central part of the economic theory of distributive justice it essentially corresponds to the need to express an ideal of equality in societies where preferences and endowments are heterogeneous this paper surveys various formulations of the idea of envy freeness starting with the simple distribution model then adding the possibility for agents to have different native talent endowments and finally moving to models with production many classical results are displayed but emphasis is also put on recent developments mainly the ideas of minimizing envy and of absence of domination five major difficulties facing envy freeness are identified and listed as directions of future research copyright 1994 by blackwell publishers ltd

eliciting preferences to assign positions and compensation abstract we describe strategy proof rules for economies where an agent is assigned a position e g a job plus some of a divisible good for the 2 agent 2 position case we derive a robust characterization for the multi agent position case many arbitrary such rules exist so we consider additional requirements by also requiring coalitional strategy proofness or nonbossiness the range of a solution is restricted to the point that such rules are not more complex than those for the shapley scarf housing model no divisible good third we show that essentially only constant solutions are immune to manipulations involving bribes finally we demonstrate a conflict between efficiency and strategy proofness the results extend to models without externalities in which agents share positions journal of economic literature classification numbers c72 d70

firm size and productivity evidence from the electricity distribution industry in brazil in this paper we apply stochastic frontier analysis through a distance function to investigate the impact of firm size on productivity development in electricity distribution we use a sample of seventeen brazilian firms from 1998 to 2005 and decompose productivity into technical efficiency scale efficiency and technical change moreover a further step is to decompose the technical change measurement into several components the results indicate that firm size is important for industry s productivity and therefore a key aspect to consider when making decisions that affect the market structure in the electricity distribution industry

a generalized production frontier approach for estimating determinants of inefficiency in u s dairy farms this article investigates farm level efficiency of u s dairy farmers by estimating their technical and allocative efficiency technical inefficiency is assumed to be composed of a deterministic component that is a function of some farm specific characteristics and a random component by doing this we extend the stochastic frontier methodology in which determinants of technicial inefficiency are explicitly introduced in the model given the inputs variations in efficiency of farms are then explained by both deterministic and random components of technical inefficiency the empirical results indicate that a levels of education of the farmer are important factors determining technical inefficiency and b large farms are more efficient technically than small and medium sized farms both technical and allocative inefficiency are found to decrease with increase in the level of education of the farmer

strategic divide and choose abstract we consider the classic cake division problem when the cake is a heterogeneous good represented by an interval in the real line we provide a mechanism to implement in an anonymous way an envy free and efficient allocation when agents have private information on their preferences the mechanism is a multi step sequential game form in which each agent at each step receives a morsel of the cake that is the intersection of what she asks for herself and what the other agent concedes to her

rental harmony with roommates abstract we prove existence of envy free allocations in markets with heterogenous indivisible goods and money when a given quantity is supplied from each of the goods and agents have unit demands we depart from most of the previous literature by allowing agents preferences over the goods to depend on the entire vector of prices we then show how our theorem may be applied in two related problems existence of envy free allocations in a version of the cake cutting problem and existence of equilibrium in an exchange economy with indivisible goods and money our proof uses shapley s k k m s theorem and hall s marriage lemma

the combinatorial assignment problem approximate competitive equilibrium from equal incomes this paper proposes a new mechanism for combinatorial assignment for example assigning schedules of courses to students based on an approximation to competitive equilibrium from equal incomes ceei in which incomes are unequal but arbitrarily close together the main technical result is an existence theorem for approximate ceei the mechanism is approximately efficient satisfies two new criteria of outcome fairness and is strategyproof in large markets its performance is explored on real data and it is compared to alternatives from theory and practice all other known mechanisms are either unfair ex post or manipulable even in large markets and most are both manipulable and unfair

maskin monotonicity in economies with indivisible goods and money abstract we consider the problem of allocating indivisible objects with monetary transfers we show that any maskin monotonic allocation rule exhibits strong asymmetry in treating agents even on finitely restricted preference domains

a general strategy proof fair allocation mechanism abstract this paper studies a general problem of efficiently and fairly allocating n indivisible objects like jobs or houses with a certain amount of money to n persons with a requirement that each person be assigned with one object the precise preferences of individuals over both the objects and money are unknown and manipulable but assumed to follow some general patterns to ensure the existence of a fair allocation a mechanism is developed that elicits honest preferences over both the objects and money and that assigns the objects with some money to individuals efficiently and fairly

fair marriages an impossibility for marriage markets gale d and shapley l s 1962 college admissions and the stability of marriage american mathematical monthly 69 9 15 so called fair matchings do not always exist we show that restoring fairness by using monetary transfers is not always possible there are marriage markets where no amount of money can guarantee the existence of a fair allocation

the strategy structure of two sided matching markets we study two sided markets in which agents are buyers and sellers or firms and workers or men and women the agents are to form partnerships which provide them with satisfaction and at the same time make monetary transfers e g salaries or dowries the core of this market game is shown to have a particularly nice structure so that precise answers can be given to questions concerning comparative statics and manipulability the idea of using walrasian equilibrium as a mechanism for making allocations with desirable properties of fairness and efficiency has been studied extensively the scheme involves having agents specify their supply and demand functions the competitive equilibria are then calculated and allocations are made accordingly in general this procedure may run into two difficulties first nonuniqueness if there are several equilibria there may be no fair way to decide which one should be implemented and second manipulability if there is only one equilibrium an informed agent may be able to influence it by suitably falsifying his demand data however as we will show here using the walrasian mechanism does work remarkably well for a certain class of important markets these are the matching markets of our title and they include markets for single items like houses where it is assumed that traders do not wish to acquire more than one item they also include labor markets in which it is desired to match workers with jobs at suitable salaries academic markets in which students are to be assigned to educational institutions marriage markets where men and women are matched through negotiating of dowries it turns out that in these markets both the problems of nonuniqueness and manipulability can be resolved in a

sincere and sophisticated players in an equal income market abstract we study the simultaneous direct revelation mechanism associated with each equal income competitive social choice function in the allocation of objects and money among sincere and strategic agents strategic agents take advantage of sincere agents they non cooperatively coordinate on the equal income competitive allocations for the true preferences that are pareto undominated for them within the set of equal income competitive allocations sincere agents are protected to some extent however their welfare is usually above their maximin payoff

no envy and consistency in economies with indivisible goods we consider the problem of fair allocation in economies with indivisible goods our main objective is to identify appealing subsolutions of the no envy solution we formulate desirable properties of solutions and look for solutions satisfying them given an allocation chosen by a solution for some economy and given a subgroup of the agents consider the problem of fairly distributing among its members the resources that this group has collectively received the solution is consistent if it recommends that the same bundle be attributed to each of these agents as initially we show that there is no proper subsolution of the no envy solution that satisfies consistency however many subsolutions satisfy bilateral consistency or the converse of consistency but again there is no proper subsolution satisfying these two properties together

semiparametric smooth coefficient stochastic frontier model this paper proposes a semiparametric smooth coefficient spsc stochastic production frontier model where regression coefficients are unknown smooth functions of environmental factors z technical inefficiency is specified in the form of a parametric scaling function which also depends on the z variables thus in our spsc model the z variables affect productivity directly via the technology parameters as well as through inefficiency a residual based bootstrap test of the relevance of the environmental factors in the spsc model is suggested an empirical application is also used to illustrate the technique

fair allocation of indivisible goods and criteria of justice a set of n objects and an amount m of money is to be distributed among m people example the objects are tasks and the money is compensation from a fixed budget an elementary argument via constrained optimization shows that for m sufficiently large the set of efficient envy free allocations is nonempty and has a nice structure in particular various criteria of justice lead to unique best fair allocations that are well behaved with respect to changes of m this is in sharp contrast to the usual fair division theory with divisible goods