Subscription Mechanisms for Network Formation
Title: Subscription Mechanisms for Network Formation
Publisher: Academic Press Inc Elsevier Science
Citation: Journal of Economic Theory, 2002, 106, 2, 242-264
We analyze a model of network formation where the costs of link formation are publicly known but individual benefits are not known to the social planner. The objective is to design a simple mechanism ensuring efficiency, budget balance, and equity. We propose two mechanisms towards this end; the first ensures efficiency and budget balance but not equity. The second mechanism corrects the asymmetry in payoffs through a two-stage variant of the first mechanism. Journal of Economic Literature Classification Numbers: C71, C72, D20.
Subject: networks; mechanism design; shapley value
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