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No Profitable Decomposition in Quasi-Linear Allocation Problems

We study the problem of allocating a bundle of perfectly divisible private goods from an axiomatic point of view, in situations where compensations can be made through monetary transfers. The key property we impose on the allocation rule requires that no agent should be able to gain by decomposing the problem into sequences of subproblems. Combined with additional standard properties, it leads to a characterization of the rule that shares the total surplus equally. Hence a traditional welfarist rule emerges as the unique consequence of our axioms phrased in a natural economic environment.

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File URL: http://www.brown.edu/Departments/Economics/Papers/2009/2009-6_paper.pdf
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Paper provided by Brown University, Department of Economics in its series Working Papers with number 2009-6.

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Date of creation: 2009
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Handle: RePEc:bro:econwp:2009-6
Contact details of provider: Postal: Department of Economics, Brown University, Providence, RI 02912

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