On Thursday, August 29, 2002, at 02:55 PM, Fred Foldvary wrote:
>> duals being assigned arbitrary cost shares. These >> could be average program costs or could be proportionate to tax shares >> in >> the current system -- the demand revealing process works regardless of >> the >> taxation mechanism chosen to fund the public good. > > Yes, but an essential element is that each individual be assigned a > specific > cost share, in dollars, so that he knows ahead of stating a value what > it > will cost. That is Hal Varian's explanation in * Intermediate > Microeconomics * . > >> The tax payment extracted in the running of the demand revealing >> process >> is intended only to induce truthful preference revelation, not to fund >> the >> chosen program. > > The Clarke tax is thusly used. But the cost share assigned to a > participant > should fund the project. > >> So, nothing specifies that tax >> payments approximate social costs, whether instrumental or expressive >> voting is assumed. > > The cost of the item should be paid by the assigned tax shares of the > participants. Otherwise indeed it makes no sense. > > The method as stated by Varian is: > 1) Assigen a cost c(i) to each agent i. > He will pay this if the item is obtained. > > 2) Have each agent state a value s(i). The net value n(i) is the stated > value minus the cost c(i). > > 3) If the sum of the stated values exceeds the total cost C, the item is > obtained. > > 4) The decisive (pivotal) agents pay the social cost (Clarke tax) equal > to > the sum of the
