After recent earthquakes in the U.S. and Japan, the rebuilding of the gas, road, and electric power networks that constitute the lifelines infrastructure has shown that large welfare gains can be achieved by reshaping current emergency plans as incentive-compatible contracts with lifelines service providers. This report presents a class of mechanisms for repair works that a disinterested planner without comprehensive information about repair costs could adopt to implement in a preferred location and sequence. Such mechanisms would help to coordinate repair work among firms and set the correct location priorities. This approach may also be applied more generally to achieve efficient recoveries after other major natural disasters.
Keywords: earthquake reconstruction, public utilities, natural disasters, network externalities, mechanism design
Full List of PEER Reports: click here.
