Search

Recoveries after recent earthquakes in the U.S. and Japan have shown that large welfare gains can be achieved by reshaping current emergency plans as incentive-compatible contracts. We apply tools from the mechanisms design literature to show ways to integrate economic incentives into the management of natural disasters and discuss issues related to the application to seismic event recovery. The focus is on restoring lifeline services such as the water, gas, transportation, and electric power networks. We put forward decisional procedures that an uninformed planner could employ to set repair priorities and help to coordinate lifeline firms in the post-earthquake reconstruction.

The debate over “network neutrality” has recently emerged as the single most important communications policy issue—at least within the United States—that is now being debated around the world. The resolution of this debate may greatly influence what applications and content are available to Internet users, which business models are successful for service providers, which modes of social communication develop, and which technical designs are effective. As applications move to become Internet Protocol (IP)-based, the reverberations will also reach those sectors that build on or compete with the Internet, including the telephone, television, radio, and electronic commerce sectors. The magnitude of this issue demands careful consideration by policymakers. The papers in this special issue can serve as a valuable basis for such consideration.

Recoveries after recent earthquakes in the U.S. and Japan have shown that large welfare gains can be achieved by reshaping current emergency plans as incentive-compatible contracts. We apply tools from the mechanisms design literature to show ways to integrate economic incentives into the management of natural disasters and discuss issues related to the application to seismic event recovery. The focus is on restoring lifeline services such as the water, gas, transportation, and electric power networks. We put forward decisional procedures that an uninformed planner could employ to set repair priorities and help to coordinate lifeline firms in the post-earthquake reconstruction.

In this paper we present a set of axioms guaranteeing that, in exchange economies with or without indivisible goods, the set of Nash, Strong and active Walrasian Equilibria all coincide in the framework of market games.

The theory of mechanism design and implementation abounds with clever mechanisms whose equilibrium outcomes are optimal according to some social choice rule. However, the cleverness of these mechanisms relies on intricate systems of rewards and punishments off-the-equilibrium path. Generally, it is not in the designer's best interest to go through with the reward/punishment in the "subgame" arising from some disequilibrium play. This would make the mechanism's outcome function non-credible. In the context of exchange economies, we define an appropiate notion of "credible" implementation and show that (a) the non-dictatorial Pareto correspondence can be crediblyimplemented (b) there exists no credibly implementable Pareto-efficient and individually rational social choice rule and (c) there exists no credibly implementable fair social choice rules. We derive necessary and sufficient conditions for credible implementability of choice rules. The main implication is paradoxical: it is suboptimal for the designer to be endowed with "too much" information about the economy. Finally, we show that the negative results persist even under weaker credibility requirements .

Recoveries after recent earthquakes in the U.S. and Japan have shown that large welfare gains can be achieved by reshaping current emergency plans as incentive-compatible contracts. We apply tools from the mechanisms design literature to show ways to integrate economic incentives into the management of natural disasters and discuss issues related to the application to seismic event recovery. The focus is on restoring lifeline services such as the water, gas, transportation, and electric power networks. We put forward decisional procedures that an uninformed planner could employ to set repair priorities and help to coordinate lifeline firms in the post-earthquake reconstruction., This work was supported by the Earthquake Engineering Research Centers Program of the National Science Foundation, under Award number EEC-9701568 through the Pacific Earthquake Engineering Research Center (PEER) and by a Marie Curie Individual Fellowship to the first author.

We examine the design of nonlinear prices by a multiproduct monopolist who serves customers with multidimensional but correlated types. We show that the monopoly can exploit the correlations between consumers' types to design pricing mechanisms that fully extract the surplus from each consumer. Our main insight is that regardless of the dimensionality of the consumers types and the number of goods that the monopoly produces, the surplus that each consumer gets from buying is a scalar. Hence, it is possible to design a two step mechanism where in the first step the monopoly induces the consumers to make efficient purchasing decisions (given their private information), and in the second step the monopoly extracts the surplus from each consumer via a (random) fixed fee.

In this paper we present a set ofaxioms guaranteeing that, in exchange economies with or without indivisible goods, the set of Nash, Strong and active Walrasian Equilibria aH coincide in the framework of market games.

Since the 1970's most industrialized countries have undertaken massiveinvestment in computers and information technology (IT). Several stylizedfacts emerge from the empirical studies, see Landauer, 1993. In particular,they have found that this investment has not lead to a general increase intotal factor productivity. This is known as the "productivity paradox". Also,some apparently inconsistent findings do emerge from these studies. Inparticular, the initial introduction of new IT by a firm tends to increase itsmarket share, and finally, there is evidence that while in most industriesproductivity has failed to increase, in monopolistic and regulated industriesthere is evidence that computers and IT have increased productivity. Wepresent a simple economic model of IT innovation. We find that in the model,measured productivity gains depends on rnarket structure. In fact the"productivity paradox" is most likely to emerge in markets dominated by asmall number of firms. It cannot emerge in either monopoly or highlycompetitive markets.

The theory of mechanism design and implementation abounds with clever mechanism whose equilibrium outcomes are optimal according to some social choice rule. However, the cleverness of these mechanisms relies on intricate systems of rewards and punishments off-the-equilibrium path. Generally, it is not in the designer?s best interest to go through with the reward/punishment in the "subgame" arising from some disequilibrium play. This would make the mechanism?s outcome function non-credible. In the context of exchange economies, we define an appropiate notion of "credible" implementation and show that(a) the non-dictatorial Pareto correspondence can be credibly implemented(b) there exists no credibly implementable fair social choice rules. We derive necessary and sufficient conditions for credible implementability of choice rules. We derive necessary and sufficient conditions for credible implementability of choice rules. The main implication is paradoxical: it is suboptimal for the designer to be endowed with "too much" information about the economy. Finally, we show that the negative results persist even under weaker credibility requirements.

In this paper we present a market-based mechanism for allocating public goods which implements the Ratio correspondence in both Nash and Strong Equilibria