Efficient bidding with externalities

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13 Citations (Scopus)

Abstract

We implement a family of efficient proposals to share benefits generated in environments with externalities. These proposals extend the Shapley value to games with externalities and are parametrized through the method by which the externalities are averaged. We construct two slightly different mechanisms: one for environments with negative externalities and the other for positive externalities. We show that the subgame perfect equilibrium outcomes of these mechanisms coincide with the sharing proposals. © 2005 Elsevier Inc. All rights reserved.
Original languageEnglish
Pages (from-to)304-320
JournalGames and Economic Behavior
Volume57
DOIs
Publication statusPublished - 1 Nov 2006

Keywords

  • Bidding
  • Externalities
  • Implementation
  • Shapley value

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