A Unique Informationally Efficient Allocation Mechanism In Economies With Consumption Externalities* Academic Article uri icon

abstract

  • This article investigates the informational requirements of resource allocation processes in pure exchange economies with consumption externalities. It is shown that the distributive Lindahl mechanism has a minimal informational size of the message space, and thus it is informationally the most efficient allocation process that is informationally decentralized and realizes Pareto-efficient allocations over the class of economies that include nonmalevolent economies. Furthermore, it is shown that the distributive Lindahl mechanism is the unique informationally efficient decentralized mechanism that realizes Pareto-efficient and individually rational allocations over a certain class of nonmalevolent economies.

author list (cited authors)

  • Tian, G.

citation count

  • 8

publication date

  • February 2004

publisher