A simple auction mechanism for the optimal allocation of the commons
Efficient regulation of the commons requires information about the regulated firms that is rarely available to regulators (e.g., cost of pollution abatement). Different mechanisms have been proposed for inducing firms to reveal their private information but for reasons I discuss in the paper, I find...
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| Format: | Working Paper |
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MIT Center for Energy and Environmental Policy Research
2009
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| Online Access: | http://hdl.handle.net/1721.1/45054 |
| _version_ | 1826193472404586496 |
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| author | Montero, Juan-Pablo |
| author2 | Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. |
| author_facet | Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. Montero, Juan-Pablo |
| author_sort | Montero, Juan-Pablo |
| collection | MIT |
| description | Efficient regulation of the commons requires information about the regulated firms that is rarely available to regulators (e.g., cost of pollution abatement). Different mechanisms have been proposed for inducing firms to reveal their private information but for reasons I discuss in the paper, I find these mechanisms of limited use. I propose a much simpler mechanism that implements the first-best for any number of firms: a uniform price sealed-bid auction of an endogenous number of (transferable) licenses with a fraction of the auction revenues given back to firms. Paybacks, which decrease with the number of firms, are such that truth-telling is a dominant strategy regardless of whether firms behave non-cooperatively or collusively. |
| first_indexed | 2024-09-23T09:39:43Z |
| format | Working Paper |
| id | mit-1721.1/45054 |
| institution | Massachusetts Institute of Technology |
| last_indexed | 2024-09-23T09:39:43Z |
| publishDate | 2009 |
| publisher | MIT Center for Energy and Environmental Policy Research |
| record_format | dspace |
| spelling | mit-1721.1/450542019-04-12T09:56:16Z A simple auction mechanism for the optimal allocation of the commons Montero, Juan-Pablo Massachusetts Institute of Technology. Center for Energy and Environmental Policy Research. Efficient regulation of the commons requires information about the regulated firms that is rarely available to regulators (e.g., cost of pollution abatement). Different mechanisms have been proposed for inducing firms to reveal their private information but for reasons I discuss in the paper, I find these mechanisms of limited use. I propose a much simpler mechanism that implements the first-best for any number of firms: a uniform price sealed-bid auction of an endogenous number of (transferable) licenses with a fraction of the auction revenues given back to firms. Paybacks, which decrease with the number of firms, are such that truth-telling is a dominant strategy regardless of whether firms behave non-cooperatively or collusively. 2009-04-03T17:07:17Z 2009-04-03T17:07:17Z 2006 Working Paper 2006-008 http://hdl.handle.net/1721.1/45054 159939543 MIT-CEEPR (Series) ; 06-008WP. 33, [3] p application/pdf MIT Center for Energy and Environmental Policy Research |
| spellingShingle | Montero, Juan-Pablo A simple auction mechanism for the optimal allocation of the commons |
| title | A simple auction mechanism for the optimal allocation of the commons |
| title_full | A simple auction mechanism for the optimal allocation of the commons |
| title_fullStr | A simple auction mechanism for the optimal allocation of the commons |
| title_full_unstemmed | A simple auction mechanism for the optimal allocation of the commons |
| title_short | A simple auction mechanism for the optimal allocation of the commons |
| title_sort | simple auction mechanism for the optimal allocation of the commons |
| url | http://hdl.handle.net/1721.1/45054 |
| work_keys_str_mv | AT monterojuanpablo asimpleauctionmechanismfortheoptimalallocationofthecommons AT monterojuanpablo simpleauctionmechanismfortheoptimalallocationofthecommons |