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Cooperative provision of indivisible public goods

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  • Pierre Dehez
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    Abstract

    A community faces the obligation of providing an indivisible public good. Each member is capable of providing it at a certain cost and the solution is to rely on the player who can do it at the lowest cost. It is then natural that he or she be compensated by the other players. The question is to know how much they should each contribute. We model this compensation problem as a cost sharing game to which standard allocation rules are applied and related to the solution resulting from the auction procedures proposed by Kleindorfer and Sertel (1994).

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    Bibliographic Info

    Paper provided by Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg in its series Working Papers of BETA with number 2010-14.

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    Date of creation: 2010
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    Handle: RePEc:ulp:sbbeta:2010-14

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    Keywords: public goods; cost sharing; core; nucleolus; Shapley value.;

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    1. DEHEZ, Pierre, 2009. "Allocation of fixed costs and the weighted Shapley value," CORE Discussion Papers 2009035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Marc-Hubert Depret & Abdelillah Hamdouch, 2010. "Les clusters et les réseaux comme fondements de la dynamique d'innovation dans l'industrie biopharmaceutique," Working Papers of BETA 2010-11, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    3. S. C. Littlechild & G. Owen, 1973. "A Simple Expression for the Shapley Value in a Special Case," Management Science, INFORMS, vol. 20(3), pages 370-372, November.
    4. Kleindorfer Paul R. & Sertel Murat R., 1994. "Auctioning the Provision of an Indivisible Public Good," Journal of Economic Theory, Elsevier, vol. 64(1), pages 20-34, October.
    5. Kunreuther, Howard & Kleindorfer, Paul & Knez, Peter J. & Yaksick, Rudy, 1987. "A compensation mechanism for siting noxious facilities: Theory and experimental design," Journal of Environmental Economics and Management, Elsevier, vol. 14(4), pages 371-383, December.
    6. Faulhaber, Gerald R, 1975. "Cross-Subsidization: Pricing in Public Enterprises," American Economic Review, American Economic Association, vol. 65(5), pages 966-77, December.
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