Related papers: Beyond Pigouvian Taxes: A Worst Case Analysis
We study monopoly regulation under asymmetric information about costs when subsidies are infeasible. A monopolist with privately known marginal cost serves a single product market and sets a price. The regulator maximizes a weighted welfare…
When people pick routes to minimize their travel time, the total experienced delay, or social cost, may be significantly greater than if people followed routes assigned to them by a social planner. This effect is accentuated when human…
The effective design and management of public transport systems are essential to ensure the best service for users. The performance of a transport system will depend heavily on user behaviour. In the common-lines problem approach, users…
The Nobel-price winning Mirrlees' theory of optimal taxation inspired a long sequence of research on its refinement and enhancement. However, an issue of concern has been always the fact that, as was shown in many publications, the optimal…
At the zero lower bound, the New Keynesian model predicts that output and inflation collapse to implausibly low levels, and that government spending and forward guidance have implausibly large effects. To resolve these anomalies, we…
We derive the most probable distribution of resources for a simple society. We find that a probabilistic analysis forbids both too much and too less equity, and selects instead a minimally ordered state. We give the detailed calculations…
This paper studies how household heterogeneity affects the level and cyclical behavior of the optimal carbon tax in a real economy. We demonstrate that an equity-efficiency trade-off arises due to income inequality and heterogeneity in the…
Informal and privatized transit services, such as minibuses and shared auto-rickshaws, are integral to daily travel in large urban metropolises, providing affordable commutes where a formal public transport system is inadequate and other…
How can we design mechanisms to promote efficient use of shared resources? Here, we answer this question in relation to the well-studied class of atomic congestion games, used to model a variety of problems, including traffic routing.…
We study selfish routing games where users can choose between regular and priority service for each network edge on their chosen path. Priority users pay an additional fee, but in turn they may travel the edge prior to non-priority users,…
In the so-called ``fair'' models of peer-to-peer wealth exchanges, economic inequality tends to reach its maximum value asymptotically. This global trend is evident as the richest continuously accumulate a larger share of wealth at the…
This paper analyzes whether a minimum wage should be used for redistribution on top of taxes and transfers. I characterize optimal redistribution for a government with three policy instruments -- labor income taxes and transfers, corporate…
Dybvig (1988a,b) solves in a complete market setting the problem of finding a payoff that is cheapest possible in reaching a given target distribution ("cost-efficient payoff"). In the presence of ambiguity, the distribution of a payoff is,…
The inefficiency of selfish routing in congested networks is a classical problem in algorithmic game theory, often captured by the Price of Anarchy (i.e., the ratio between the social cost of decentralized decisions and that of a centrally…
When traffic is routed through a network that is susceptible to congestion, the self-interested decisions made by individual users do not, in general, produce the optimal flow. This discrepancy is quantified by the so-called "price of…
Motivated by the impact of emerging technologies on toll parks, this paper studies a problem of equilibrium, social welfare, and revenue for an infinite-server queue. More specifically, we assume that a customer's utility consists of a…
If AI displaces human workers faster than the economy can reabsorb them, it risks eroding the very consumer demand firms depend on. We show that knowing this is not enough for firms to stop it. In a competitive task-based model, demand…
The impact of energy production significantly affects system sustainability, which has enabled a shift towards renewable energy sources. Thus, producer behavior is crucial in electricity markets to achieve sustainability goals. In this…
We ask if it is possible to positively influence social behavior with no risk of unintentionally incentivizing pathological behavior. In network routing problems, if network traffic is composed of many individual agents, it is known that…
This work focuses on the design of taxes in atomic congestion games, a commonly studied model for competitive resource sharing. While most related studies focus on optimizing either the worst- or best-case performance (i.e., Price of…