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Cost sharing with multiple technologies

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  • Trudeau, Christian

Abstract

We study cost sharing problems where gains from cooperation can come from the presence of other agents, such as when agents share their technologies. A simple model is built, where economies of scale are eliminated in order to study this effect. We use as the key axiom the property that, if an agent does not improve the technology of any coalition he joins, he should not get any part of the gain from cooperation. With properties of linearity and symmetry, this axiom characterizes a well-defined set of rules. From this set, we propose a rule derived from the familiar Shapley value. We show that it is the only rule in that set satisfying an upper-limit property on individual cost allocations or a monotonicity property when technology improves. We also derive a distinct rule using a property that ensures that no coalition has an incentive to manipulate the individual demands of its members.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 67 (2009)
Issue (Month): 2 (November)
Pages: 695-707

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Handle: RePEc:eee:gamebe:v:67:y:2009:i:2:p:695-707

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Web page: http://www.elsevier.com/locate/inca/622836

Related research

Keywords: Cost sharing Technology Dummy property Shapley value;

References

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  1. Eric J. Friedman, 2004. "Paths and consistency in additive cost sharing," International Journal of Game Theory, Springer, vol. 32(4), pages 501-518, 08.
  2. MOULIN, Hervé & SPRUMONT, Yves., 2002. "Responsibility and Cross-Subsidization in Cost Sharing," Cahiers de recherche 2002-19, Universite de Montreal, Departement de sciences economiques.
  3. Justin Leroux, 2006. "Cooperative production under diminishing marginal returns: Interpreting fixed-path methods," Cahiers de recherche 06-10, HEC Montréal, Institut d'économie appliquée.
  4. Wang, YunTong, 1999. "The additivity and dummy axioms in the discrete cost sharing model," Economics Letters, Elsevier, vol. 64(2), pages 187-192, August.
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Cited by:
  1. Koster, M., 2009. "Contracts, cost sharing and consistency," CeNDEF Working Papers 09-04, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.

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