Responsibility and cross-subsidization in cost sharing
Abstract
We propose two axiomatic theories of cost sharing with the common premise that agents demand comparable -though perhaps different- commodities and are responsible for their own demand. Under partial responsibility the agents are not responsible for the asymmetries of the cost function: two agents consuming the same amount of output always pay the same price; this holds true under full responsibility only if the cost function is symmetric in all individual demands. If the cost function is additively separable, each agent pays her stand alone cost under full responsibility; this holds true under partial responsibility only if, in addition, the cost function is symmetric. By generalizing Moulin and Shenkerâs (1999) Distributivity axiom to cost-sharing methods for heterogeneous goods, we identify in each of our two theories a different serial method. The subsidy-free serial method (Moulin, 1995) is essentially the only distributive method meeting Ranking and Dummy. The cross-subsidizing serial method (Sprumont, 1998) is the only distributive method satisfying Separability and Strong Ranking. Finally, we propose an alternative characterization of the latter method based on a strengthening of Distributivity.(This abstract was borrowed from another version of this item.)
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Bibliographic Info
Article provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 55 (2006)
Issue (Month): 1 (April)
Pages: 152-188
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Web page: http://www.elsevier.com/locate/inca/622836
Related research
Keywords:Other versions of this item:
- Moulin, Herve & Sprumont, Yves, 2002. "Responsibility and Cross-Subsidization in Cost Sharing," Working Papers 2002-05, Rice University, Department of Economics.
- MOULIN, Hervé & SPRUMONT, Yves., 2002. "Responsibility and Cross-Subsidization in Cost Sharing," Cahiers de recherche 2002-19, Universite de Montreal, Departement de sciences economiques.
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- SPRUMONT, Yves, 2004.
"Nearly Serial Sharing Methods,"
Cahiers de recherche
17-2004, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
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"On Demand Responsiveness in Additive Cost Sharing,"
Working Papers
2004-03, Rice University, Department of Economics.
- Moulin, Herve & Sprumont, Yves, 2005. "On demand responsiveness in additive cost sharing," Journal of Economic Theory, Elsevier, vol. 125(1), pages 1-35, November.
- Moulin, Herve & Sprumont, Yves, 2003. "On Demand Responsiveness in Additive Cost Sharing," Working Papers 2003-10, Rice University, Department of Economics.
- MOULIN, Hervé & SPRUMONT, Yves, 2005.
"Fair Allocation of Production Externalities: Recent Results,"
Cahiers de recherche
28-2005, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Hervé Moulin & Yves Sprumont, 2007. "Fair allocation of production externalities : recent results," Revue d'économie politique, Dalloz, vol. 0(1), pages 7-36.
- SPRUMONT, Yves & MOULIN, Hervé, 2005. "Fair Allocation of Production Externalities: Recent Results," Cahiers de recherche 2005-22, Universite de Montreal, Departement de sciences economiques.
- Yves Sprumont, 2010.
"An Axiomatization of the Serial Cost-Sharing Method,"
Econometrica,
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- SPRUMONT, Yves, 2010. "An Axiomatization of the Serial Cost-Sharing Method," Cahiers de recherche 2010-01, Universite de Montreal, Departement de sciences economiques.
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"Characterization of additive cost sharing methods,"
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