Abstract
We investigate Groves mechanisms for economies where (i) a social outcome specifies a group of winning agents, and (ii) a cost function associates each group with a monetary cost. In particular, we characterize both (i) the class of cost functions for which there are Groves mechanisms such that the agents cover the costs through voluntary payments, and (ii) the class of cost functions for which there are envy-free Groves mechanisms. It follows directly from our results that whenever production efficient and envy-free allocations can be implemented in dominant strategies, this can moreover be done while funding production through voluntary payments.
| Original language | English |
|---|---|
| Pages (from-to) | 1181-1223 |
| Journal | Theoretical Economics |
| Volume | 18 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - 2023 |
JEL classifications
- d82 - "Asymmetric and Private Information; Mechanism Design"
- d47 - Market Design
- d24 - "Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity"
- d44 - Auctions
- h41 - Public Goods
- d61 - "Allocative Efficiency; Cost-Benefit Analysis"
- d63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
Keywords
- costly inclusion
- Groves mechanism
- pivot mechanism
- Vickrey auction
- free-rider problem
- labor markets