Beyond Pigouvian Taxes: A Worst Case Analysis

Moshe Babaioff, Ruty Mundel*, Noam Nisan

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contributionpeer-review

Abstract

In the early 20th century, Pigou observed that imposing a marginal cost tax on the usage of a public good induces a socially efficient level of use as an equilibrium. Unfortunately, such a “Pigouvian” tax may also induce other, socially inefficient, equilibria. We observe that this social inefficiency may be unbounded, and study whether alternative tax structures may lead to milder losses in the worst case, i.e. to a lower price of anarchy. We show that no tax structure leads to bounded losses in the worst case. However, we do find a tax scheme that has a lower price of anarchy than the Pigouvian tax, obtaining tight lower and upper bounds in terms of a crucial parameter that we identify. We generalize our results to various scenarios that each offers an alternative to the use of a public road by private cars, such as ride sharing, or using a bus or a train.

Original languageAmerican English
Title of host publicationWeb and Internet Economics - 17th International Conference, WINE 2021, Proceedings
EditorsMichal Feldman, Hu Fu, Inbal Talgam-Cohen
PublisherSpringer Science and Business Media Deutschland GmbH
Pages226-243
Number of pages18
ISBN (Print)9783030946753
DOIs
StatePublished - 2022
Event17th International Conference on Web and Internet Economics, WINE 2021 - Virtual, Online
Duration: 14 Dec 202117 Dec 2021

Publication series

NameLecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)
Volume13112 LNCS
ISSN (Print)0302-9743
ISSN (Electronic)1611-3349

Conference

Conference17th International Conference on Web and Internet Economics, WINE 2021
CityVirtual, Online
Period14/12/2117/12/21

Bibliographical note

Publisher Copyright:
© 2022, Springer Nature Switzerland AG.

Keywords

  • Pigouvian tax
  • Price of anarchy
  • Public good
  • Ride sharing

Fingerprint

Dive into the research topics of 'Beyond Pigouvian Taxes: A Worst Case Analysis'. Together they form a unique fingerprint.

Cite this