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SERIAL COST-SHARING
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AI
DOI：10.2307/2951537.png)
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Abstract
En 中文
A fixed group of n agents share a one input, one output technology with decreasing returns. We propose the following cost sharing formula. Agent 1 with the lowest demand of output q1 pays (1/n)th of the cost of nq1. Agent 2, with the next lowest demand q2 pays agent 1's cost share plus 11(n - 1)th of the incremental cost from nq1 to (n - 1)q2 + q1. Agent 3, with the next lowest demand q3 Pays agent 2's cost share, plus 1/(n - 2)th of the incremental cost from (n - 1)q2 + q1 to (n - 2)q3 + q2 + q1. And so on. Among agents endowed with convex and monotonic preferences, serial cost sharing is dominance solvable and its unique equilibrium is also robust to coalitional deviations. We show that no other smooth cost sharing mechanism yields a unique Nash equilibrium at all preference profiles.
Keywords:
COST SHARING
SURPLUS SHARING
DECREASING RETURNS
AVERAGE COST PRICING
NASH EQUILIBRIUM
STRATEGY PROOFNESS
Journal
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7.1
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3.0K
Citations:
4.3W
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