The Effectiveness of Subsidies and Taxes in Atomic Congestion Games

Are subsidies or taxes more effective at influencing user behavior? To answer this question, we focus on the well-studied framework of atomic congestion games which model resource allocation problems in non-cooperative environments. Examples of such resource allocation problems include transportation networks, task assignment, content distribution systems, among others. Monetary incentives, in the form of taxes or subsidies, are commonly employed in such systems to influence self-interested behavior and improve system efficiency. Our first result demonstrates that subsidies can provide strong improvement guarantees when compared to taxes of a similar magnitude. While interesting, our second result demonstrates that this improvements come at the expense of robustness. In particular, taxes provide greater robustness guarantees to mischaracterizations in the societal response when compared to subsidies. Hence, whether a system operator should employ taxes or subsidies depends intimately on the knowledge of the user population.