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An Axiomatic Approach to the Airline Emission Fees Problem

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  • Yuntong Wang

    ()
    (Department of Economics, University of Windsor)

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    Abstract

    An airline lands in a number of airports in a region. An airport serves a number of airlines. Each airport charges a given amount of emission fees to those airlines using the airport. The total emission fees from all airports in the region must be shared among all airlines. We propose an axiomatic approach to this airline emission fees problem. We suggest a sharing rule called the Decomposition rule that is based on a few simple axioms. The Decomposition rule coincides with the Shapley value of the game associated with the problem and is shown in the core. Thus, no alliance of airlines can reduce their emission fees by forming an independent coalition. On the other hand, we also show that the Decomposition rule is split-proof. In other words, no airline has an incentive to split into two or more airlines.

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    File URL: http://web2.uwindsor.ca/economics/RePEc/wis/pdf/1308.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 1308.

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    Length: 10 pages
    Date of creation: 26 Aug 2013
    Date of revision:
    Handle: RePEc:wis:wpaper:1308

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    Related research

    Keywords: Airline emission fees; Shapley value; core; split-proofness.;

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    1. Jens Leth Hougaard & Hervé Moulin, 2012. "Sharing the Cost of Redundant Items," MSAP Working Paper Series 06_2012, University of Copenhagen, Department of Food and Resource Economics.
    2. Moulin, Herve & Laigret, Francois, 2011. "Equal-need sharing of a network under connectivity constraints," Games and Economic Behavior, Elsevier, vol. 72(1), pages 314-320, May.
    3. Yves Sprumont, 2005. "On the Discrete Version of the Aumann-Shapley Cost-Sharing Method," Econometrica, Econometric Society, vol. 73(5), pages 1693-1712, 09.
    4. 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.
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