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- A Procedure For Sharing Recycling Costs

  • José Alcalde

    ()

    (Universidad de Andalucía)

  • José Angel Silva

    (Universidad de Alicante)

This paper examines a situation in which the production activities of different agents, in a common geographical location, create waste products that are either of a similar biological or chemical composition or offer commercially compatible combinations. What we propose here, therefore, is a cost-sharing model for the of recycling of their waste products. We concentrate, however, on the specific case in which the agents' activities are heterogeneous. We first examine, from a normative point of view, the cost-sharing rule, which we shall call the multi-commodity serial (MCS) rule. We introduce a property, that we call Cost-Based Equal Treatment, and we demonstrate that the unique rule verifying the Serial Principle and this property is the MCS rule. We then deal with the analysis of the agents' strategic behavior when they are allowed to select their own production levels, in which case the total cost is then split, in accordance with the MCS rule. We show that there is only one Nash equilibrium, which is obtained from an interactive elimination of dominated strategies.

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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2000-14.

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Length: 27 pages
Date of creation: Jun 2000
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2000-14
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  1. Moulin, Herve, 1979. "Dominance Solvable Voting Schemes," Econometrica, Econometric Society, vol. 47(6), pages 1137-51, November.
  2. Koster, M.A.L. & Tijs, S.H. & Borm, P.E.M., 1998. "Serial cost sharing methods for multi-commodity situations," Other publications TiSEM 6633be50-672a-42f3-a966-8, Tilburg University, School of Economics and Management.
  3. Eric Friedman & Moulin, Herve, 1995. "Three Methods to Share Joint Costs or Surplus," Working Papers 95-38, Duke University, Department of Economics.
  4. Sprumont, Yves, 1998. "Ordinal Cost Sharing," Journal of Economic Theory, Elsevier, vol. 81(1), pages 126-162, July.
  5. 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.
  6. Hervé Moulin, 1994. "Serial Cost-Sharing of Excludable Public Goods," Review of Economic Studies, Oxford University Press, vol. 61(2), pages 305-325.
  7. Moulin, Herve & Shenker, Scott, 1992. "Serial Cost Sharing," Econometrica, Econometric Society, vol. 60(5), pages 1009-37, September.
  8. Maurice Koster, 2007. "The Moulin–Shenker rule," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 29(2), pages 271-293, September.
  9. Samet, Dov & Tauman, Yair, 1982. "The Determination of Marginal Cost Prices under a Set of Axioms," Econometrica, Econometric Society, vol. 50(4), pages 895-909, July.
  10. Young, H Peyton, 1985. "Producer Incentives in Cost Allocation," Econometrica, Econometric Society, vol. 53(4), pages 757-65, July.
  11. Mirman, Leonard J. & Tauman, Y., 1982. "The continuity of the Aumann-Shapley price mechanism," Journal of Mathematical Economics, Elsevier, vol. 9(3), pages 235-249, March.
  12. E. Loehman & A. Whinston, 1974. "An Axiomatic Approach to Cost Allocation for Public Investment," Public Finance Review, , vol. 2(2), pages 236-250, April.
  13. Eric Friedman, 1999. "Strong Monotonicity in Surplus Sharing," Departmental Working Papers 199919, Rutgers University, Department of Economics.
  14. Mirman, Leonard J. & Tauman, Yair & Zang, Israel, 1986. "Ramsey prices, average cost prices and price sustainability," International Journal of Industrial Organization, Elsevier, vol. 4(2), pages 123-140, June.
  15. S. C. Littlechild & G. Owen, 1973. "A Simple Expression for the Shapley Value in a Special Case," Management Science, INFORMS, vol. 20(3), pages 370-372, November.
  16. Eric Friedman, 1999. "Paths and Consistency in Additive Cost Sharing," Departmental Working Papers 199923, Rutgers University, Department of Economics.
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