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Allocation mechanisms, incentives, and endemic institutional externalities
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Hammond, Peter J. (2018) Allocation mechanisms, incentives, and endemic institutional externalities. In: Trockel, Walter, (ed.) Social Design : Essays in Memory of Leonid Hurwicz Studies in Economic Design. Studies in economic design . Cham, Switzerland : Springer, pp. 175-186. ISBN 9783319938097
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Official URL: https://www.springer.com/gp/book/9783319938080
Abstract
Whether an economic agent’s decision creates an externality often depends on the institutional context in which the decision was made. Indeed, in orthodox economics, a technological or exogenous externality occurs just in case one agent’s economic welfare or production possibilities are directly affected by the market decisions of other agents. A pecuniary externality occurs just in case one consumer’s economic welfare or producer’s profit is affected indirectly by price changes caused by changes in other agents’ decisions. Similarly, an institutional or endogenous externality may arise whenever allocations are determined by a mechanism that is not strategy proof for some agent. Then even a resource balance constraint creates an institutional externality except in special cases such as when no individual agent’s action can affect market clearing prices — i.e., there are no pecuniary externalities.
Item Type: | Book Item | ||||||
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Divisions: | Faculty of Social Sciences > Economics | ||||||
Series Name: | Studies in economic design | ||||||
Publisher: | Springer | ||||||
Place of Publication: | Cham, Switzerland | ||||||
ISBN: | 9783319938097 | ||||||
Book Title: | Social Design : Essays in Memory of Leonid Hurwicz Studies in Economic Design | ||||||
Editor: | Trockel, Walter | ||||||
Official Date: | April 2018 | ||||||
Dates: |
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Page Range: | pp. 175-186 | ||||||
Institution: | University of Warwick | ||||||
Status: | Not Peer Reviewed | ||||||
Publication Status: | Published | ||||||
Access rights to Published version: | Open Access (Creative Commons) | ||||||
Date of first compliant deposit: | 12 March 2018 | ||||||
Date of first compliant Open Access: | 12 March 2018 | ||||||
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