Tian, Guoqiang (2004): On the Informational Requirements of Decentralized ParetoSatisfactory Mechanisms in Economies with Increasing Returns.

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Abstract
This paper investigates the dimension requirements of informationally decentralized Paretosatisfactory processes in production economies with increasing returns to scale or more general types of nonconvexities. We show that the marginal cost pricing (MCP) mechanism is informationally effcient over the class of nonconvex production economies where MCP equilibrium allocations are Pareto effcient. We then discuss the informational requirements of realizing Pareto effcient allocations for a general class of nonconvex production economies. We do so by examining the dimension of the message space of the marginal cost pricing mechanism with transfers. Since the set of marginal cost pricing equilibrium allocations with transfers contains Pareto effcient allocations as a subset for every economy under consideration, Pareto e±cient allocations can be realized through the MCP mechanism with transfers, which is informationally decentralized and has a finitedimensional message space. This result is sharply contrasted to the impossibility result given in Calsamigla (1977).
Item Type:  MPRA Paper 

Original Title:  On the Informational Requirements of Decentralized ParetoSatisfactory Mechanisms in Economies with Increasing Returns 
Language:  English 
Keywords:  Informational Requirements, Decentralized ParetoSatisfactory Mechanisms, Increasing Returns 
Subjects:  D  Microeconomics > D5  General Equilibrium and Disequilibrium D  Microeconomics > D7  Analysis of Collective DecisionMaking > D71  Social Choice; Clubs; Committees; Associations P  Economic Systems > P5  Comparative Economic Systems > P51  Comparative Analysis of Economic Systems D  Microeconomics > D8  Information, Knowledge, and Uncertainty > D83  Search; Learning; Information and Knowledge; Communication; Belief D  Microeconomics > D6  Welfare Economics > D61  Allocative Efficiency; CostBenefit Analysis 
Item ID:  41226 
Depositing User:  Guoqiang Tian 
Date Deposited:  12. Sep 2012 12:53 
Last Modified:  13. Feb 2013 06:22 
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URI:  http://mpra.ub.unimuenchen.de/id/eprint/41226 