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Decentralized pricing in minimum cost spanning trees

Author

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  • Jens Hougaard

    ()

  • Hervé Moulin

    ()

  • Lars Østerdal

    ()

Abstract

In the minimum cost spanning tree model we consider decentralized pricing rules, i.e. rules that cover at least the efficient cost while the price charged to each user only depends upon his own connection costs. We define a canonical pricing rule and provide two axiomatic characterizations. First, the canonical pricing rule is the smallest among those that improve upon the Stand Alone bound, and are either superadditive or piece-wise linear in connection costs. Our second, direct characterization relies on two simple properties highlighting the special role of the source cost.
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Suggested Citation

  • Jens Hougaard & Hervé Moulin & Lars Østerdal, 2010. "Decentralized pricing in minimum cost spanning trees," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 44(2), pages 293-306, August.
  • Handle: RePEc:spr:joecth:v:44:y:2010:i:2:p:293-306
    DOI: 10.1007/s00199-009-0485-6
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. María Gómez-Rúa & Juan Vidal-Puga, 2017. "A monotonic and merge-proof rule in minimum cost spanning tree situations," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 63(3), pages 813-826, March.
    2. repec:spr:joecth:v:65:y:2018:i:3:d:10.1007_s00199-017-1034-3 is not listed on IDEAS
    3. Jens Leth Hougaard & Mich Tvede, 2010. "Strategyproof Nash Equilibria in Minimum Cost Spanning Tree Models," MSAP Working Paper Series 01_2010, University of Copenhagen, Department of Food and Resource Economics.
    4. Hougaard, Jens Leth & Tvede, Mich, 2012. "Truth-telling and Nash equilibria in minimum cost spanning tree models," European Journal of Operational Research, Elsevier, vol. 222(3), pages 566-570.

    More about this item

    Keywords

    Pricing rules; Minimum cost spanning trees; Canonical pricing rule; Stand-alone cost; Decentralization; C71; D60;

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D60 - Microeconomics - - Welfare Economics - - - General

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