Case & Working Paper
| Paper Number | KCB-WP-2025-004 |
|---|---|
| Title | A Budget-Balanced Mechanism for Siting Noxious Facilities with Identity-Dependent Externalities |
| Title(Other) | |
| Author | Younghwan In ; Yunkyeong Seo |
| Publisher | KAIST College of Business |
| Abstract | We apply Minehart and Neeman's (2002) auction-like procedure for siting noxious facilities to the environments where there are identity-dependent externalities, i.e. the negative externality depends on who becomes the host. We show that it is an epsilon-equilibrium for any small epsilon for each community to bid its true disutility minus the minimum externality if there are a sufficient number of communities in a general asymmetric environment. We also show that the bidding in a symmetric Bayesian Nash equilibrium converges to the true disutility minus the average externality as the number of communities gets larger in a symmetric environment. Both equilibria tend to hurt efficiency by choosing a socially undesirable host. |
| Full-Text | * Full-Text 다운로드는 경영대학 학생에게만 제공되고 있습니다. |
Contact : Kim, HaengRan ( hrkim@business.kaist.ac.kr )
