On the impossibility of a generalization of the libertarian resolution of the liberal paradox (Q910314)

This paper studies the possibility of extending the result due to \textit{A. Harel} and \textit{S. Nitzan} [J. Economics 47, 337-352 (1987; Zbl 0642.90004)] to non-binary rights systems. The main result of the paper is that only under very restrictive conditions does the Harel-Nitzan mechanism of exchangeable rights continue to function optimally when the rights system is non-binary. Indeed, as few as three nonexchangeable social states suffice to prevent such a system from working.