FEEM working papers "Note di lavoro" series
2012 .041

On Sharing the Benefits of Communication

Authors: Efthymios Athanasiou, Santanu Dey, Giacomo Valletta
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Keywords: Groves Mechanisms, Externality, Budget Surplus or Deficit, Pareto Undominated
JEL n.: D70, D62, C60


We put forward a model of private goods with externalities. Agents derive benefit from communicating with each other. In order to communicate they need to have a language in common. Learning languages is costly. In this setting no individually rational and feasible Groves mechanism exists. We characterize the best-in-class feasible Groves mechanism and the best-in-class individually rational Groves mechanism.

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