Efficient bidding with externalities

Inés Macho-Stadler, David Pérez-Castrillo, David Wettstein

Research output: Contribution to journalArticlepeer-review

20 Scopus citations


We implement a family of efficient proposals to share benefits generated in environments with externalities. These proposals extend the Shapley value to games with externalities and are parametrized through the method by which the externalities are averaged. We construct two slightly different mechanisms: one for environments with negative externalities and the other for positive externalities. We show that the subgame perfect equilibrium outcomes of these mechanisms coincide with the sharing proposals.

Original languageEnglish
Pages (from-to)304-320
Number of pages17
JournalGames and Economic Behavior
Issue number2
StatePublished - 1 Nov 2006


  • Bidding
  • Externalities
  • Implementation
  • Shapley value

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


Dive into the research topics of 'Efficient bidding with externalities'. Together they form a unique fingerprint.

Cite this