The successful formation and long-term stability of a cooperative venture is often linked to the perceived fairness of the associated cost or resource allocation. In particular, the effectiveness of such collaborations can be hampered by the lack of a consensus view on what basis should be used for gauging an allocation’s “fairness.” Standards of equity in traditional cost-sharing applications could be assessed on many dimensions: per capita, per unit of demand, or per unit of revenue, to mention a few. This multiplicity of logically compelling “equity bases” is a feature common to many practical cost-sharing applications. Our analysis shows that features of the allocation environment are capable of explaining a substantial amount of the variation in the equity bases employed in practice and are consistent with the axiomatic principles of collective behavior.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
8725.
Find related papers by JEL classification: D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
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