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An efficient and almost budget balanced cost sharing method

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  • Moulin, Hervé

Abstract

For a convex technology C we characterize cost sharing games where the Nash equilibrium demands maximize total surplus. Budget balance is possible if and only if C is polynomial of degree n-1 or less. For general C, the residual* cost shares are balanced if at least one demand is null, a characteristic property. If the cost function is totally monotone, a null demand receives cash and total payments may exceed actual cost. The ratio of excess payment to efficient surplus is at most . For power cost functions, C(a)=ap, p>1, the ratio of budget imbalance to efficient surplus vanishes as . For analytic cost functions, the ratio converges to zero exponentially along a given sequence of users. All asymptotic properties are lost if the cost function is not smooth.

Suggested Citation

  • Moulin, Hervé, 2010. "An efficient and almost budget balanced cost sharing method," Games and Economic Behavior, Elsevier, vol. 70(1), pages 107-131, September.
  • Handle: RePEc:eee:gamebe:v:70:y:2010:i:1:p:107-131
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    Cited by:

    1. Carbajal, Juan Carlos & McLennan, Andrew & Tourky, Rabee, 2013. "Truthful implementation and preference aggregation in restricted domains," Journal of Economic Theory, Elsevier, vol. 148(3), pages 1074-1101.
    2. repec:eee:matsoc:v:90:y:2017:i:c:p:182-190 is not listed on IDEAS
    3. Marden, Jason R. & Shamma, Jeff S., 2015. "Game Theory and Distributed Control****Supported AFOSR/MURI projects #FA9550-09-1-0538 and #FA9530-12-1-0359 and ONR projects #N00014-09-1-0751 and #N0014-12-1-0643," Handbook of Game Theory with Economic Applications, Elsevier.
    4. Harks, Tobias & von Falkenhausen, Philipp, 2014. "Optimal cost sharing for capacitated facility location games," European Journal of Operational Research, Elsevier, vol. 239(1), pages 187-198.
    5. Yi, Jianxin & Li, Yong, 2016. "A general impossibility theorem and its application to individual rights," Mathematical Social Sciences, Elsevier, vol. 81(C), pages 79-86.

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