A Taxation Policy for Maximizing Social Welfare in Networks: A General Framework

TL;DR

This paper introduces a simple, decentralized tatonnement process for networked utility maximization that achieves maximal social welfare without requiring private utility information from individuals.

Contribution

It proposes a novel, easy-to-implement decomposition-based tatonnement method that guarantees optimal social welfare in networks with minimal information exchange.

Findings

Achieves maximal social welfare in network utility allocation

Requires minimal information exchange among individuals

Operates effectively both at and off equilibrium

Abstract

We present a simple tatonnement process based on a decomposition method which is simple to implement and achieves the maximal social welfare, under the assumption that the utility function of each [price-taking] individual will be his own private information and need not be known by the designer. At each iteration, very little information needs to be exchanged among the individuals in order to achieve the optimal allocation. Furthermore, the given tatonnement process is always balanced at equilibrium and off equilibrium.