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Cost-allocation principles for pipeline capacity and usage

  • Salant, David
  • Watkins, G.C.

This paper applies principles f rom game theory to the problem o f allocating the cost o f a shared facility, such as a pipeline. The theory o f cooperative games s t r ongl y suggest s t hat no method e x i s t s for allocating costs that wi l l achieve all major policy goals. We apply results from the theory o f cooperative games a n d principles o f cost allocation to assess some c o mmo n l y adopted rules for allocating costs and def i ni ng u n i t charges. Mos t notably, the postage-stamp toll is f o u n d to fail a mi ni mal set o f commonly applied principles.

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File URL: http://mpra.ub.uni-muenchen.de/12090/1/MPRA_paper_12090.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 12090.

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Date of creation: 1996
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Publication status: Published in Energy Studies Review 2.8(1996): pp. 91-101
Handle: RePEc:pra:mprapa:12090
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