Decentralized Pricing in Minimum Cost Spanning Trees
AbstractIn the minimum cost spanning tree model we consider decentralized pricing rules, i.e. rules that cover at least the efficient cost while the price charged to each user only depends upon his own connection costs. We define a canonical pricing rule and provide two axiomatic characterizations. First, the canonical pricing rule is the smallest among those that improve upon the Stand Alone bound, and are either superadditive or piece-wise linear in connection costs. Our second, direct characterization relies on two simple properties highlighting the special role of the source cost.
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Bibliographic InfoPaper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 08-24.
Length: 13 pages
Date of creation: Oct 2008
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pricing rules; minimum cost spanning trees; canonical pricing rule; stand-alone cost; decentralization;
Other versions of this item:
- Jens Hougaard & Hervé Moulin & Lars Østerdal, 2010. "Decentralized pricing in minimum cost spanning trees," Economic Theory, Springer, vol. 44(2), pages 293-306, August.
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- D60 - Microeconomics - - Welfare Economics - - - General
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