An Axiomatic Approach to the Airline Emission Fees Problem

Yuntong Wang ()
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Yuntong Wang: Department of Economics, University of Windsor

No 1308, Working Papers from University of Windsor, Department of Economics

Abstract: An airline lands in a number of airports in a region. An airport serves a number of airlines. Each airport charges a given amount of emission fees to those airlines using the airport. The total emission fees from all airports in the region must be shared among all airlines. We propose an axiomatic approach to this airline emission fees problem. We suggest a sharing rule called the Decomposition rule that is based on a few simple axioms. The Decomposition rule coincides with the Shapley value of the game associated with the problem and is shown in the core. Thus, no alliance of airlines can reduce their emission fees by forming an independent coalition. On the other hand, we also show that the Decomposition rule is split-proof. In other words, no airline has an incentive to split into two or more airlines.

Keywords: Airline emission fees; Shapley value; core; split-proofness. (search for similar items in EconPapers)
JEL-codes: C71 D61 D62 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2013-08-26
New Economics Papers: this item is included in nep-env, nep-gth and nep-tre
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http://web2.uwindsor.ca/economics/RePEc/wis/pdf/1308.pdf First version, 2013 (application/pdf)

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