Chapter 7 Mechanism design for the environment

Sandeep Baliga*, Eric Maskin

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingChapter

40 Scopus citations


We argue that when externalities such as pollution are nonexcludable, agents must be compelled to participate in a "mechanism" to ensure a Pareto-efficient outcome. We survey some of the main findings of the mechanism-design (implementation-theory) literature - such as the Nash implementation theorem, the Gibbard-Satterthwaite theorem, the Vickrey-Clarke-Groves mechanism, and the Arrow/d'Aspremont-Gerard-Varet mechanism - and consider their implications for the environment, in particular the reduction of aggregate emissions of pollution. We consider the cases of both complete and incomplete information.

Original languageEnglish (US)
Title of host publicationEnvironmental Degradation and Institutional Responses
Number of pages20
ISBN (Print)9780444500632
StatePublished - Jan 1 2003

Publication series

NameHandbook of Environmental Economics
ISSN (Print)1574-0099


  • D6
  • D7
  • H4
  • Q2
  • Q3
  • asymmetric information
  • implementation
  • mechanism design
  • public goods

ASJC Scopus subject areas

  • Economics and Econometrics
  • Management, Monitoring, Policy and Law


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