Upstream Serial Sharing in the Polluted River Problem

The allocation of cleanup costs in polluted rivers raises the question of how these costs can be fairly distributed among the agents located along the river. Building on the framework of Ni and Wang (2007), this paper introduces the Upstream Serial Sharing (USS) method. This method endogenously decomposes cleanup costs into successive layers based on the agents' cost levels and, at each layer, equally shares the corresponding increment of the cost of each river segment among the agent occupying that segment and the upstream agents whose own costs reach that level. We first investigate the main properties of the USS method, focusing on continuity, monotonicity, and additivity. We then provide an axiomatic characterization of the USS method based on Efficiency, Independence of Higher Costs, and Upper Symmetric Fairness. Finally, we establish a connection between the USS method, the core of an upstream-oriented cooperative game, and the Upstream Equal Sharing method.