This paper takes an axiomatic approach to find rules for allocating the value of a network when the externalities generated across components are identifiable. Two new, and different, allocation rules are defined and characterized in this context. The first one is an extension of the player-based flexible-network allocation rule (Jackson (2005)). The second one follows the flexible network approach from a component-wise point of view, where the notion of network flexibility is adjusted with a flavor of core stability. Furthermore, two other allocation rules are proposed by relaxing the axiom of equal treatment of vital players. These collapse into the player-based flexible-network allocation rule (Jackson (2005)) for zero-normalized value functions with no externalities across components.
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Paper provided by Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center in its series Working Papers with number
2008-2.
Find related papers by JEL classification: C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
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