‘Almost’ subsidy-free spatial pricing in a multi-dimensional setting

Jacques Dreze, Le Breton Michel, Savvatev Alexei and Weber Sholmo
Additional contact information
Le Breton Michel: Université de Toulouse I, GREMAQ and IDEI, Toulouse, France
Savvatev Alexei : NES, Moscow
Weber Sholmo: Southern Methodist University, Dallas, USA and Université Catholique de Louvain, CORE - Belgium

No 2007030, Discussion Papers (ECON - Département des Sciences Economiques) from Université catholique de Louvain, Département des Sciences Economiques

Abstract: Consider a population of citizens uniformly spread over the entire plane, that faces a problem of locating public facilities to be used by its members. The cost of every facility is financed by its users, who also face an idiosyncratic private access cost to the facility. We assume that the facilities cost is independent of location and access costs are linear with respect to the Euclidean distance. We show that an external intervention that covers O.19% of the facility cost is sufficient to guarantee secession-proofness or no cross-subsidization, where no group of individuals is charged more than its stand alone cost incurred if it had acted on its own. Moreover, we demonstrate that in this case the Rawlsian access pricing is the only secession-proof allocation.

Keywords: Secession-proofness; optimal jurisdictions; Rawlsian allocation; hexagonal partition; cross-subsidiziation (search for similar items in EconPapers)
JEL-codes: D70 H20 H73 (search for similar items in EconPapers)
Pages: 23
Date: 2007-09-01
New Economics Papers: this item is included in nep-pbe
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http://sites.uclouvain.be/econ/DP/IRES/2007-30.pdf (application/pdf)

Related works:
Journal Article: "Almost" subsidy-free spatial pricing in a multi-dimensional setting (2008)
Working Paper: 'Almost' Subsidy-free Spatial Pricing in a Multi-dimensional Setting (2007)
Working Paper: “Almost” subsidy-free spatial pricing in a multi-dimensional setting (2007)
Working Paper: “Almost” Subsidy-free Spatial Pricing in a Multi-dimensional Setting (2007)
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