A solution to the problem of consumption externalities Academic Article uri icon


  • This paper considers the problem of incentive mechanism design that results in efficient allocations for economies with consumption externalities when preferences, individual endowments, and coalition patterns among individuals are unknown to the planner. We do so by introducing the notion of constrained distributive Lindahl equilibrium. We give a mechanism that implements constrained distributive Lindahl allocations in Nash and strong Nash equilibria. Since the Pigouvian mechanism is a special case of the distributive Lindahl mechanism, the mechanism also implements the Pigouvian allocations. The mechanism is feasible and continuous. It works not only for three or more agents, but also for two-agent economies. 2002 Elsevier Science B.V. All rights reserved.

published proceedings

  • Journal of Mathematical Economics

author list (cited authors)

  • Tian, G.

citation count

  • 6

complete list of authors

  • Tian, Guoqiang

publication date

  • January 2003