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Minimum Cost Connection Networks: Truth-telling and Implementation

  • Jens Leth Hougaard


    (Department of Food and Resource Economics, University of Copenhagen)

  • Mich Tvede

    (Newcastle University Business School, Newcastle University)

In the present paper we consider the allocation of cost in connection networks. Agents have connection demands in form of pairs of locations they want to be connected. Connections between locations are costly to build. The problem is to allocate costs of networks satisfying all connection demands. We use three axioms to characterize allocation rules that truthfully implement cost minimizing networks satisfying all connection demands in a game where: (1) a central planner announces an allocation rule and a cost estimation rule; (2) every agent reports her own connection demand as well as all connection costs; and, (3) the central planner selects a cost minimizing network satisfying reported connection demands based on estimated connection costs and allocates true connection costs of the selected network.

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Paper provided by University of Copenhagen, Department of Food and Resource Economics in its series MSAP Working Paper Series with number 03_2013.

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Length: 20 pages
Date of creation: Oct 2013
Date of revision:
Handle: RePEc:foi:msapwp:03_2013
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  1. 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.
  2. Rajnish Kumar & Ruben Juarez, . "Implementing Efficient Graphs in Connection Networks," Departmental Working Papers 2011-03, Department of Economics, Louisiana State University.
  3. Tijs, Stef & Branzei, Rodica & Moretti, Stefano & Norde, Henk, 2006. "Obligation rules for minimum cost spanning tree situations and their monotonicity properties," European Journal of Operational Research, Elsevier, vol. 175(1), pages 121-134, November.
  4. Bogomolnaia, Anna & Moulin, Hervé, 2010. "Sharing a minimal cost spanning tree: Beyond the Folk solution," Games and Economic Behavior, Elsevier, vol. 69(2), pages 238-248, July.
  5. Gustavo Bergantiños & Leticia Lorenzo, 2004. "A non-cooperative approach to the cost spanning tree problem," Mathematical Methods of Operations Research, Springer, vol. 59(3), pages 393-403, 07.
  6. Bergantiños, Gustavo & Vidal-Puga, Juan, 2010. "Realizing fair outcomes in minimum cost spanning tree problems through non-cooperative mechanisms," European Journal of Operational Research, Elsevier, vol. 201(3), pages 811-820, March.
  7. Moulin, Hervé, 2014. "Pricing traffic in a spanning network," Games and Economic Behavior, Elsevier, vol. 86(C), pages 475-490.
  8. repec:spr:compst:v:59:y:2004:i:3:p:393-403 is not listed on IDEAS
  9. Jackson, Matthew O, 1991. "Bayesian Implementation," Econometrica, Econometric Society, vol. 59(2), pages 461-77, March.
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