Cost Sharing, Differential Games, and the Moulin-Shenker Rule
The Moulin-Shenker rule (Sprumont (1998)) is a nonlinear solution concept for solving heterogeneous cost sharing problems. The first part of the paper shows an axiomatic characterization of this solution using bounds on cost shares and consistency. The second part is devoted to differential games for heterogeneous production problems. It is shown for 2-player games that by an appropriate choice of the game dynamics there is essentially a unique Markov perfect Nash equilibrium. An axiomatic analysis follows for the appropriate game dynamics, which leads in turn to a strategic characterization of the Moulin-Shenker rule.
|Date of creation:||2005|
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Cahiers de recherche
9624, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
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95-19, Duke University, Department of Economics.
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- Moulin, Herve, 2001.
"Axiomatic Cost and Surplis-Sharing,"
2001-06, Rice University, Department of Economics.
- Maniquet, Francois, 1996. "Allocation Rules for a Commonly Owned Technology: The Average Cost Lower Bound," Journal of Economic Theory, Elsevier, vol. 69(2), pages 490-507, May.
- Young, H.P., 1994. "Cost allocation," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 34, pages 1193-1235 Elsevier.
- 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.
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