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Independence of dummy units and Shapley-Shubik methods in cost sharing problems with technological cooperation

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  • Eric Bahel

    ()
    (Department of Economics, Virginia Polytechnic Institute and State University)

  • Christian Trudeau

    ()
    (Department of Economics, University of Windsor)

Abstract

In the discrete cost sharing model with technological cooperation (Bahel and Trudeau (IJGT, 2013)), we study the implications of a number of properties that strengthen the well-known Dummy axiom. Our main axiom, which requires that costless units of demands do not affect the cost shares, is used to characterize two classes of rules. Combined with anonymity and a specific stability property, this requirement picks up sharing methods that allow the full compensation of at most one technological contribution. If instead we strengthen the well-known Dummy property to include agents whose technological contribution is offset by the cost of their demand, we are left with an adaptation of the Shapley-Shubik method that treats technologies as private and rewards their contributions. Our results provide two interesting axiomatizations for the adaptations of the Shapley-Shubik rule to our framework.

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File URL: http://web2.uwindsor.ca/economics/RePEc/wis/pdf/1304.pdf
File Function: First version, 2013
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Bibliographic Info

Paper provided by University of Windsor, Department of Economics in its series Working Papers with number 1304.

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Length: 20 pages
Date of creation: Jun 2013
Date of revision:
Handle: RePEc:wis:wpaper:1304

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Keywords: Shapley-Shubik; Technological Cooperation; Dummy;

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  1. Moulin, Herve & Sprumont, Yves, 2004. "On Demand Responsiveness in Additive Cost Sharing," Working Papers 2004-03, Rice University, Department of Economics.
  2. Moulin, Herve, 1995. "On Additive Methods to Share Joint Costs," Mathematical Social Sciences, Elsevier, vol. 30(1), pages 98-99, August.
  3. Sprumont, Y., 1996. "Ordinal Cost Sharing," Cahiers de recherche 9624, Universite de Montreal, Departement de sciences economiques.
  4. Martin Shubik, 1961. "Incentives, Decentralized Control, the Assignment of Joint Costs and Internal Pricing," Cowles Foundation Discussion Papers 112, Cowles Foundation for Research in Economics, Yale University.
  5. Eric Bahel & Christian Trudeau, 2013. "A discrete cost sharing model with technological cooperation," International Journal of Game Theory, Springer, vol. 42(2), pages 439-460, May.
  6. Yves Sprumont, 2008. "Nearly serial sharing methods," International Journal of Game Theory, Springer, vol. 37(2), pages 155-184, June.
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