Minimum Cost Connection Networks: Truth-telling and Implementation

Jens Leth Hougaard () and Mich Tvede
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Jens Leth Hougaard: Department of Food and Resource Economics, University of Copenhagen

No 03_2013, MSAP Working Paper Series from University of Copenhagen, Department of Food and Resource Economics

Abstract: In the present paper we consider the allocation of cost in connection networks. Agents have connection demands in form of pairs of locations they want to be connected. Connections between locations are costly to build. The problem is to allocate costs of networks satisfying all connection demands. We use three axioms to characterize allocation rules that truthfully implement cost minimizing networks satisfying all connection demands in a game where: (1) a central planner announces an allocation rule and a cost estimation rule; (2) every agent reports her own connection demand as well as all connection costs; and, (3) the central planner selects a cost minimizing network satisfying reported connection demands based on estimated connection costs and allocates true connection costs of the selected network.

Keywords: axiomatic characterization; connection networks; cost sharing; implementation; truth-telling (search for similar items in EconPapers)
JEL-codes: C70 C72 D71 D85 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2013-10
New Economics Papers: this item is included in nep-cdm, nep-gth and nep-net
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Journal Article: Minimum cost connection networks: Truth-telling and implementation (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:foi:msapwp:03_2013

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