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Balanced externalities and the proportional allocation of nonseparable contributions

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  • van den Brink, René
  • Chun, Youngsub
  • Funaki, Yukihiko
  • Zou, Zhengxing

Abstract

This paper provides axiomatic characterizations of the proportional allocation of nonseparable contributions (PANSC) value for TU games, being the solution which allocates the total worth proportional to the separable contributions of the players. First, we show that the PANSC value is the only one satisfying efficiency and weak balanced externalities, the last axiom requiring that every player’s payoff is the same fraction of the total externality inflicted on the other players with her presence. This is a weakening of balanced externalities studied in the context of queueing problems to characterize the Shapley value. Our second characterization is obtained by investigating the dual relation between the PANSC value and the proportional division value, showing that the PANSC value is the only one satisfying complement consistency and dual proportional standardness. In addition, we discuss the relation between the PANSC value and two methods widely used in cost allocation problems: the separable costs remaining benefits method and the alternative cost avoided method.

Suggested Citation

  • van den Brink, René & Chun, Youngsub & Funaki, Yukihiko & Zou, Zhengxing, 2023. "Balanced externalities and the proportional allocation of nonseparable contributions," European Journal of Operational Research, Elsevier, vol. 307(2), pages 975-983.
    • Handle: RePEc:eee:ejores:v:307:y:2023:i:2:p:975-983
    DOI: 10.1016/j.ejor.2022.10.017
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