Undertaking Nonharmful or Harmful Public Projects Through Unit-by-Unit Contribution: Coordination and Pareto Efficiency

34 Pages Posted: 27 Sep 2016  

Ryusuke Shinohara

Department of Economics, Hosei University

Date Written: September 26, 2016

Abstract

We examine in detail the implementation of a project that is non-harmful for all agents as well as a project that is harmful for some agents through a unit-by-unit contribution mechanism. For a project that is non-harmful for all agents, efficient implementation is supported at one regular Nash equilibrium and several refined Nash equilibria that are stable against coalition deviations. In this sense, this mechanism works well. On the other hand, when the project is harmful for some agents, this mechanism may not have a Nash equilibrium with efficient implementation of the project. Even when such a Nash equilibrium exists, it may not be selected by any of the refined Nash equilibria. Thus, in this case, this mechanism does not work. Our result shows that the merit of the unit-by-unit contribution mechanism reported in the literature is partially extensible to the implementation of a public project.

Keywords: public project; unit-by-unit contribution; Pareto efficiency; strong Nash equilibria; coalition-proof Nash equilibria

JEL Classification: C72, D62, D74, H41

Suggested Citation

Shinohara, Ryusuke, Undertaking Nonharmful or Harmful Public Projects Through Unit-by-Unit Contribution: Coordination and Pareto Efficiency (September 26, 2016). Available at SSRN: https://ssrn.com/abstract=2842135 or http://dx.doi.org/10.2139/ssrn.2842135

Ryusuke Shinohara (Contact Author)

Department of Economics, Hosei University ( email )

4342
Aihara-machi
Machida, Tokyo 194-0298
Japan
+81-42-783-2534 (Phone)

HOME PAGE: http://ryusukeshinohara.ehoh.net/

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