Externalities and Compensation

Primeval Games and Solutions

Research output: Working paperDiscussion paperOther research output

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Abstract

The classical literature (Pigou (1920), Coase (1960), Arrow (1970)) and the relatively recent studies (cf.Varian (1994)) associate the externality problem with efficiency.This paper focuses explicitly on the compensation problem in the context of externalities.To capture the features of inter-individual externalities, this paper constructs a new game-theoretic framework: primeval games.These games are used to design normative compensation rules for the underlying compensation problems: the marginalistic rule, the concession rule, and the primeval rule.Characterizations of the marginalistic rule and the concession rule are provided and specific properties of the primeval rule are studied.
Original languageEnglish
Place of PublicationTilburg
PublisherMicroeconomics
Number of pages28
Volume2005-71
Publication statusPublished - 2005

Publication series

NameCentER Discussion Paper
Volume2005-71

Fingerprint

Externalities
Concession
Coase

Keywords

  • externality
  • compensation
  • primeval games
  • marginalistic rule
  • concession rule
  • primeval rule

Cite this

Ju, Y., & Borm, P. E. M. (2005). Externalities and Compensation: Primeval Games and Solutions. (CentER Discussion Paper; Vol. 2005-71). Tilburg: Microeconomics.
Ju, Y. ; Borm, P.E.M. / Externalities and Compensation : Primeval Games and Solutions. Tilburg : Microeconomics, 2005. (CentER Discussion Paper).
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Ju, Y & Borm, PEM 2005 'Externalities and Compensation: Primeval Games and Solutions' CentER Discussion Paper, vol. 2005-71, Microeconomics, Tilburg.

Externalities and Compensation : Primeval Games and Solutions. / Ju, Y.; Borm, P.E.M.

Tilburg : Microeconomics, 2005. (CentER Discussion Paper; Vol. 2005-71).

Research output: Working paperDiscussion paperOther research output

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T1 - Externalities and Compensation

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Ju Y, Borm PEM. Externalities and Compensation: Primeval Games and Solutions. Tilburg: Microeconomics. 2005. (CentER Discussion Paper).