Redistribution Mechanism Design on Networks

Redistribution mechanisms have been proposed for more efficient resource allocation but not for profit. We consider redistribution mechanism design for the first time in a setting where participants are connected and the resource owner is only aware of her neighbours. In this setting, to make the resource allocation more efficient, the resource owner has to inform the others who are not her neighbours, but her neighbours do not want more participants to compete with them. Hence, the goal is to design a redistribution mechanism such that participants are incentivized to invite more participants and the resource owner does not earn or lose much money from the allocation. We first show that existing redistribution mechanisms cannot be directly applied in the network setting to achieve the goal. Then we propose a novel network-based redistribution mechanism such that all participants in the network are invited, the allocation is more efficient and the resource owner has no deficit.