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Cooperative provision of indivisible public goods

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  • Pierre Dehez

Abstract

A community faces the obligation of providing an indivisible public good. Each member is capable of providing it at a certain cost and the solution is to rely on the player who can do it at the lowest cost. It is then natural that he or she be compensated by the other players. The question is to know how much they should each contribute. We model this compensation problem as a cost sharing game to which standard allocation rules are applied and related to the solution resulting from the auction procedures proposed by Kleindorfer and Sertel (1994).

Suggested Citation

  • Pierre Dehez, 2010. "Cooperative provision of indivisible public goods," Working Papers of BETA 2010-14, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  • Handle: RePEc:ulp:sbbeta:2010-14
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    File URL: http://www.beta-umr7522.fr/productions/publications/2010/2010-14.pdf
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    References listed on IDEAS

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    1. Kleindorfer Paul R. & Sertel Murat R., 1994. "Auctioning the Provision of an Indivisible Public Good," Journal of Economic Theory, Elsevier, vol. 64(1), pages 20-34, October.
    2. Faulhaber, Gerald R, 1975. "Cross-Subsidization: Pricing in Public Enterprises," American Economic Review, American Economic Association, vol. 65(5), pages 966-977, December.
    3. Marc-Hubert Depret & Abdelillah Hamdouch, 2010. "Les clusters et les réseaux comme fondements de la dynamique d'innovation dans l'industrie biopharmaceutique," Working Papers of BETA 2010-11, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    4. Kunreuther, Howard & Kleindorfer, Paul & Knez, Peter J. & Yaksick, Rudy, 1987. "A compensation mechanism for siting noxious facilities: Theory and experimental design," Journal of Environmental Economics and Management, Elsevier, vol. 14(4), pages 371-383, December.
    5. DEHEZ, Pierre, 2009. "Allocation of fixed costs and the weighted Shapley value," CORE Discussion Papers 2009035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. 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.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    public goods; cost sharing; core; nucleolus; Shapley value.;

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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