In this paper, we study the problem of the incentive mechanism design for non-convex production
economies by introducing the notion of generalized mechanism in which one agent’s feasible message domain may depend on the other agents’ messages. We consider implementation of various most often considered price equilibrium principles by using well-behaved and simple mechanisms. We allow that production sets, preferences and individual endowments are all unknown to the planner. We present generalized mechanisms that fully implement loss-free, average cost, marginal cost, voluntary trading, and quantity-taking pricing equilibrium allocations in social equilibrium. These mechanisms are elementary and natural mechanisms, which have many nice properties such as feasibility, continuity, forthrightness, and best response. In addition, they use finite-dimensional message spaces which are lower than the existing mechanisms that implement Walrasian allocations for convex production
economies with more than two agents. Furthermore, the mechanisms work not only for three or more agents, but also for two-agent economies.
Keywords and Phrases: Generalized mechanism, implementation, various pricing
equilibrium principles, increasing returns, and well-behaved mechanism design.
Journal of Economic Literature Classification Number: C72, D51, D61, D71.
