4. Suppose an object is to be allocated to either Bob, Charlie, or David. Whoever receives the object, it will generate consumption externalities for the other indi- viduals in accordance with Table 2.

   (a) What is the efficient outcome? (b) Find the VCG transfers for this problem.

   (c) Is there an efficient mechanism for this problem which never runs a deficit?

a=B a=C a=D vb(a) VB -2 -1 | vd(a) -1 -2 up Table 2 Negative consumption externality a=B a=C a=D vb(a) VB -2 -1 | vd(a) -1 -2 up Table 2 Negative consumption externality