IDEAS home Printed from https://ideas.repec.org/a/cai/repdal/redp_171_0007.html
   My bibliography  Save this article

Fair allocation of production externalities : recent results

Author

Listed:
  • Hervé Moulin
  • Yves Sprumont

Abstract

We survey recent axiomatic results in the theory of cost-sharing. A method assigns cost shares to the users of a facility for any profile of demands and any monotonic cost function. We discuss two radically different views of the asymmetries of the cost function. Under full responsibility, each agent is accountable for the part of the costs that can be unambiguously separated and attributed to her own demand. Under partial responsibility, the asymmetries of the cost function have no bearing on individual cost shares, only the differences in demand levels matter. We describe several invariance and monotonicity properties that reflect both normative and strategic concerns. We uncover a number of logical trade-offs between our axioms, and derive axiomatic characterizations: in the full responsibility approach, of the Shapley-Shubik, Aumann-Shapley, and subsidy-free serial methods; in the partial responsibility approach, of the cross-subsidizing serial method and of the family of quasi-proportional methods.

Suggested Citation

  • Hervé Moulin & Yves Sprumont, 2007. "Fair allocation of production externalities : recent results," Revue d'économie politique, Dalloz, vol. 117(1), pages 7-36.
  • Handle: RePEc:cai:repdal:redp_171_0007
    as

    Download full text from publisher

    File URL: http://www.cairn.info/load_pdf.php?ID_ARTICLE=REDP_171_0007
    Download Restriction: free

    File URL: http://www.cairn.info/revue-d-economie-politique-2007-1-page-7.htm
    Download Restriction: free

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sprumont, Yves, 1998. "Ordinal Cost Sharing," Journal of Economic Theory, Elsevier, vol. 81(1), pages 126-162, July.
    2. Yves Sprumont, 2005. "On the Discrete Version of the Aumann-Shapley Cost-Sharing Method," Econometrica, Econometric Society, vol. 73(5), pages 1693-1712, September.
    3. Moulin, Herve & Shenker, Scott, 1992. "Serial Cost Sharing," Econometrica, Econometric Society, vol. 60(5), pages 1009-1037, September.
    4. Hervé Moulin & Scott Shenker, 2001. "Strategyproof sharing of submodular costs:budget balance versus efficiency," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 18(3), pages 511-533.
    5. Hervé Moulin, 1995. "On Additive Methods To Share Joint Costs," The Japanese Economic Review, Japanese Economic Association, vol. 46(4), pages 303-332, December.
    6. Koster, Maurice & Tijs, Stef & Borm, Peter, 1998. "Serial cost sharing methods for multi-commodity situations," Mathematical Social Sciences, Elsevier, vol. 36(3), pages 229-242, December.
    7. Hervé Moulin, 1990. "Joint Ownership of a Convex Technology: Comparison of Three Solutions," Review of Economic Studies, Oxford University Press, vol. 57(3), pages 439-452.
    8. Flam, S. D. & Jourani, A., 2003. "Strategic behavior and partial cost sharing," Games and Economic Behavior, Elsevier, vol. 43(1), pages 44-56, April.
    9. Yves Sprumont, 2008. "Nearly serial sharing methods," International Journal of Game Theory, Springer;Game Theory Society, vol. 37(2), pages 155-184, June.
    10. Moulin, Herve, 2002. "Axiomatic cost and surplus sharing," Handbook of Social Choice and Welfare,in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 1, chapter 6, pages 289-357 Elsevier.
    11. Eric J. Friedman, 2004. "Paths and consistency in additive cost sharing," International Journal of Game Theory, Springer;Game Theory Society, vol. 32(4), pages 501-518, August.
    12. Ori Haimanko, 2000. "Value theory without symmetry," International Journal of Game Theory, Springer;Game Theory Society, vol. 29(3), pages 451-468.
    13. Moulin, Herve & Sprumont, Yves, 2006. "Responsibility and cross-subsidization in cost sharing," Games and Economic Behavior, Elsevier, vol. 55(1), pages 152-188, April.
    14. Moulin, Herve & Sprumont, Yves, 2005. "On demand responsiveness in additive cost sharing," Journal of Economic Theory, Elsevier, vol. 125(1), pages 1-35, November.
    15. 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.
    16. Young, H Peyton, 1985. "Producer Incentives in Cost Allocation," Econometrica, Econometric Society, vol. 53(4), pages 757-765, July.
    17. Aadland, David & Kolpin, Van, 2004. "Environmental determinants of cost sharing," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 495-511, April.
    18. Fleurbaey, Marc & Maniquet, Francois, 1996. "Cooperative Production: A Comparison of Welfare Bounds," Games and Economic Behavior, Elsevier, vol. 17(2), pages 200-208, December.
    19. Martin Shubik, 1962. "Incentives, Decentralized Control, the Assignment of Joint Costs and Internal Pricing," Management Science, INFORMS, vol. 8(3), pages 325-343, April.
    20. 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.
    21. Moulin Herve & Shenker Scott, 1994. "Average Cost Pricing versus Serial Cost Sharing: An Axiomatic Comparison," Journal of Economic Theory, Elsevier, vol. 64(1), pages 178-201, October.
    22. Archer, Aaron & Feigenbaum, Joan & Krishnamurthy, Arvind & Sami, Rahul & Shenker, Scott, 2004. "Approximation and collusion in multicast cost sharing," Games and Economic Behavior, Elsevier, vol. 47(1), pages 36-71, April.
    23. Fleurbaey Marc, 1995. "Three Solutions for the Compensation Problem," Journal of Economic Theory, Elsevier, vol. 65(2), pages 505-521, April.
    24. Ju, Biung-Ghi & Miyagawa, Eiichi & Sakai, Toyotaka, 2007. "Non-manipulable division rules in claim problems and generalizations," Journal of Economic Theory, Elsevier, vol. 132(1), pages 1-26, January.
    25. Hervé Moulin, 1994. "Serial Cost-Sharing of Excludable Public Goods," Review of Economic Studies, Oxford University Press, vol. 61(2), pages 305-325.
    26. William Thomson, 1999. "Welfare-domination under preference-replacement: A survey and open questions," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 16(3), pages 373-394.
    27. Wang, YunTong, 1999. "The additivity and dummy axioms in the discrete cost sharing model," Economics Letters, Elsevier, vol. 64(2), pages 187-192, August.
    28. Samet, Dov & Tauman, Yair, 1982. "The Determination of Marginal Cost Prices under a Set of Axioms," Econometrica, Econometric Society, vol. 50(4), pages 895-909, July.
    29. Marc Fleurbaey & Walter Bossert, 1996. "Redistribution and compensation (*)," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 13(3), pages 343-355.
    30. Biung-Ghi Ju & Eiichi Miyagawa & Toyotaka Sakai, 2003. "Non-Manipulable Division Rules in Claim Problems and Generalizations," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 200307, University of Kansas, Department of Economics, revised Aug 2005.
    31. Roemer John E. & Silvestre Joaquim, 1993. "The Proportional Solution for Economies with Both Private and Public Ownership," Journal of Economic Theory, Elsevier, vol. 59(2), pages 426-444, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yves Sprumont, 2008. "Nearly serial sharing methods," International Journal of Game Theory, Springer;Game Theory Society, vol. 37(2), pages 155-184, June.
    2. Eric Bahel, 2011. "The implications of the ranking axiom for discrete cost sharing methods," International Journal of Game Theory, Springer;Game Theory Society, vol. 40(3), pages 551-589, August.
    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.
    4. Eric Bahel & Christian Trudeau, 2014. "Shapley–Shubik methods in cost sharing problems with technological cooperation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 43(2), pages 261-285, August.
    5. repec:spr:compst:v:73:y:2011:i:1:p:55-73 is not listed on IDEAS
    6. Drehmann, Mathias & Tarashev, Nikola, 2013. "Measuring the systemic importance of interconnected banks," Journal of Financial Intermediation, Elsevier, vol. 22(4), pages 586-607.
    7. Sylvain Béal & Marc Deschamps & Joël Thomas Ravix & Olivier Sautel, 2010. "Informational Advantage and Influence of Communicating Central Banks," Documents de Travail de l'OFCE 2010-04, Observatoire Francais des Conjonctures Economiques (OFCE).
    8. Bahel, Eric & Haller, Hans, 2013. "Cycles with undistinguished actions and extended Rock–Paper–Scissors games," Economics Letters, Elsevier, vol. 120(3), pages 588-591.
    9. Txus Ortells & Juan Santos, 2011. "The pseudo-average rule: bankruptcy, cost allocation and bargaining," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 73(1), pages 55-73, February.

    More about this item

    Keywords

    cost-sharing methods; fairness; responsibility;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cai:repdal:redp_171_0007. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jean-Baptiste de Vathaire). General contact details of provider: http://www.cairn.info/revue-d-economie-politique.htm .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.