On Demand Responsiveness in Additive Cost Sharing
We propose two new axioms of demand responsiveness for additive cost sharing with variable demands. Group Monotonicity requires that if a group of agents increase their demands, not all of them pay less. Solidarity says that if agent i demands more, j should not pay more if k pays less. Both axioms are compatible in the partial responsibility theory postulating Strong Ranking, i.e., the ranking of cost shares should never contradict that of demands. The combination of Strong Ranking , Solidarity and Monotonicity characterizes the quasi-proportional methods, under which cost shares are proportional to 'rescaled' demands. The alternative full responsibility theory is based on Separability, ruling out cross-subsidization when costs are additively separable. Neither the Aumann-Shapley nor the Shapley-Shubik method is group monotonic. On the otherhand, convex combinations of "nearby" fixed-path methods are group-monotonic: the subsidy-free serial method is the main example. No separable method meets Solidarity, yet restricting the axiom to submodular (or supermodular) cost functions leads to a characterization of the fixed-flow methods, containing the Shapley-Shubik and serial methods.
|Date of creation:||May 2004|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (713) 527-4875
Fax: (713) 285-5278
Web page: http://www.ruf.rice.edu/~econ/papers/index.html
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Friedman, Eric & Moulin, Herve, 1999.
"Three Methods to Share Joint Costs or Surplus,"
Journal of Economic Theory,
Elsevier, vol. 87(2), pages 275-312, August.
- William Thomson, 1999. "Welfare-domination under preference-replacement: A survey and open questions," Social Choice and Welfare, Springer, vol. 16(3), pages 373-394.
- MOULIN, Hervé & SPRUMONT, Yves., 2002.
"Responsibility and Cross-Subsidization in Cost Sharing,"
Cahiers de recherche
2002-19, Universite de Montreal, Departement de sciences economiques.
- Moulin, Herve & Sprumont, Yves, 2006. "Responsibility and cross-subsidization in cost sharing," Games and Economic Behavior, Elsevier, vol. 55(1), pages 152-188, April.
- Hervé MOULIN & Yves SPRUMONT, 2002. "Responsibility And Cross-Subsidization In Cost Sharing," Cahiers de recherche 19-2002, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Moulin, Herve & Sprumont, Yves, 2002. "Responsibility and Cross-Subsidization in Cost Sharing," Working Papers 2002-05, Rice University, Department of Economics.
- Wang, YunTong, 1999. "The additivity and dummy axioms in the discrete cost sharing model," Economics Letters, Elsevier, vol. 64(2), pages 187-192, August.
- SPRUMONT, Yves, 1999.
"Coherent Cost-Sharing Rules,"
Cahiers de recherche
9902, Universite de Montreal, Departement de sciences economiques.
- Herrero, Carmen & Maschler, Michael & Villar, Antonio, 1999.
"Individual rights and collective responsibility: the rights-egalitarian solution,"
Mathematical Social Sciences,
Elsevier, vol. 37(1), pages 59-77, January.
- Antonio Villar Notario & Carmen Herrero Blanco & Michael Maschler, 1996. "Individual rights and collective responsibility: The rights-egalitarian solution," Working Papers. Serie AD 1996-04, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Hervé Moulin, 1995.
"On Additive Methods To Share Joint Costs,"
The Japanese Economic Review,
Japanese Economic Association, vol. 46(4), pages 303-332, December.
- Moulin, Herve & Sprumont, Yves, 2004.
"On Demand Responsiveness in Additive Cost Sharing,"
2004-03, Rice University, Department of Economics.
- Martin Shubik, 1961.
"Incentives, Decentralized Control, the Assignment of Joint Costs and Internal Pricing,"
Cowles Foundation Discussion Papers
112, Cowles Foundation for Research in Economics, Yale University.
- Martin Shubik, 1962. "Incentives, Decentralized Control, the Assignment of Joint Costs and Internal Pricing," Management Science, INFORMS, vol. 8(3), pages 325-343, April.
- Sprumont, Yves & Zhou, Lin, 1999. "Pazner-Schmeidler rules in large societies," Journal of Mathematical Economics, Elsevier, vol. 31(3), pages 321-339, April.
- Sharkey,William W., 1983. "The Theory of Natural Monopoly," Cambridge Books, Cambridge University Press, number 9780521271943.
- Calvo, Emilio & Santos, Juan Carlos, 2000. "A value for multichoice games," Mathematical Social Sciences, Elsevier, vol. 40(3), pages 341-354, November.
- Moulin, Herve & Stong, Richard, 2001. "Fair Queuing and Other Probabilistic Allocation Methods," Working Papers 2000-09, Rice University, Department of Economics.
- Sprumont, Yves, 1998.
"Ordinal Cost Sharing,"
Journal of Economic Theory,
Elsevier, vol. 81(1), pages 126-162, July.
- Moulin, Herve & Shenker, Scott, 1992. "Serial Cost Sharing," Econometrica, Econometric Society, vol. 60(5), pages 1009-37, September.
- 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.
When requesting a correction, please mention this item's handle: RePEc:ecl:riceco:2004-03. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.