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A Discrete Cost Sharing Model with Technological Cooperation

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  • Eric Bahel
  • Christian Trudeau

Abstract

This paper proposes a setting that allows for technological cooperation in the cost sharing model. Dealing with discrete demands, we study two properties: Additivity and Dummy. We show that these properties are insuffcient to guarantee a unit-flow representation similar to that of Wang (1999). To obtain a characterization of unit flows, we strengthen the Dummy axiom and introduce a property that requires the cost share of every agent to be nondecreasing in the incremental costs generated by their demand. Finally, a fairness requirement as to the compensation of technological cooperation is examined.

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File URL: ftp://repec.econ.vt.edu/Papers/Bahel/sharing_techno.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by Virginia Polytechnic Institute and State University, Department of Economics in its series Working Papers with number e07-28.

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Length: 19 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:vpi:wpaper:e07-28

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Keywords: cost sharing; demand; technology; cooperation; fow methods;

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References

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  1. Yves Sprumont, 2005. "On the Discrete Version of the Aumann-Shapley Cost-Sharing Method," Econometrica, Econometric Society, vol. 73(5), pages 1693-1712, 09.
  2. Friedman, Eric & Moulin, Herve, 1999. "Three Methods to Share Joint Costs or Surplus," Journal of Economic Theory, Elsevier, vol. 87(2), pages 275-312, August.
  3. Hervé Moulin, 1995. "On Additive Methods To Share Joint Costs," The Japanese Economic Review, Japanese Economic Association, vol. 46(4), pages 303-332, December.
  4. Matthew O. Jackson, 2003. "Allocation Rules for Network Games," Working Papers 2003.51, Fondazione Eni Enrico Mattei.
  5. Trudeau, Christian, 2009. "Cost sharing with multiple technologies," Games and Economic Behavior, Elsevier, vol. 67(2), pages 695-707, November.
  6. Moulin, Herve & Sprumont, Yves, 2004. "On Demand Responsiveness in Additive Cost Sharing," Working Papers 2004-03, Rice University, Department of Economics.
  7. Bergantinos, Gustavo & Vidal-Puga, Juan J., 2007. "A fair rule in minimum cost spanning tree problems," Journal of Economic Theory, Elsevier, vol. 137(1), pages 326-352, November.
  8. Moulin, Herve & Sprumont, Yves, 2002. "Responsibility and Cross-Subsidization in Cost Sharing," Working Papers 2002-05, Rice University, Department of Economics.
  9. Hsiao Chih-Ru & Raghavan T. E. S., 1993. "Shapley Value for Multichoice Cooperative Games, I," Games and Economic Behavior, Elsevier, vol. 5(2), pages 240-256, April.
  10. Eric J. Friedman, 2004. "Paths and consistency in additive cost sharing," International Journal of Game Theory, Springer, vol. 32(4), pages 501-518, 08.
  11. Jelnov, Artyom & Tauman, Yair, 2009. "The private value of a patent: A cooperative approach," Mathematical Social Sciences, Elsevier, vol. 58(1), pages 84-97, July.
  12. 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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Citations

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Cited by:
  1. Christian Trudeau, 2013. "Minimum cost spanning tree problems with indifferent agents," Working Papers 1306, University of Windsor, Department of Economics.
  2. Eric Bahel & Hans Haller, 2012. "Cycles with Undistinguished Actions and Extended Rock-Paper-Scissors Games," Working Papers e07-35, Virginia Polytechnic Institute and State University, Department of Economics.
  3. Eric Bahel & Christian Trudeau, 2013. "Independence of dummy units and Shapley-Shubik methods in cost sharing problems with technological cooperation," Working Papers 1304, University of Windsor, Department of Economics.

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