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original papers : Proportionally adjusted marginal pricing method to share joint costs


  • YunTong Wang

    () (Faculty of Arts and Social Sciences, Sabanci University, Orhanli 81474 Tuzla / Istanbul-Turkey)


We consider the cost sharing problem with divisible demands of heterogeneous goods. We propose a cost sharing method called Proportionally Adjusted Marginal Pricing (PAMP) method. PAMP is a nonadditive (in the cost function) extension of average cost pricing. We introduce an axiom called Local Independence (LI) and use LI together with Continuity, Proportionality, and Scale Invariance to characterize PAMP.

Suggested Citation

  • YunTong Wang, 2002. "original papers : Proportionally adjusted marginal pricing method to share joint costs," Review of Economic Design, Springer;Society for Economic Design, vol. 7(2), pages 205-211.
  • Handle: RePEc:spr:reecde:v:7:y:2002:i:2:p:205-211
    Note: Received: 23 March 2001 / Accepted: 16 November 2001

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    Cited by:

    1. Babusiaux, Denis & Pierru, Axel, 2009. "Modelling and allocation of CO2 emissions in a multiproduct industry: The case of oil refining," Applied Energy, Elsevier, vol. 84(7-8), pages 828-841, July.
    2. Pierru, Axel, 2007. "Allocating the CO2 emissions of an oil refinery with Aumann-Shapley prices," Energy Economics, Elsevier, vol. 29(3), pages 563-577, May.

    More about this item


    Nonadditive cost sharing methods;

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement


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