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Polluted river problems and games with a permission structure

René van den Brink, Simin He and Jia-Ping Huang

Games and Economic Behavior, 2018, vol. 108, issue C, 182-205

Abstract: When a polluted river passes through several different regions, a challenging question is how should the costs for cleaning the river be shared among the regions. Following Ni and Wang (2007) and Dong et al. (2012), we first show that the Upstream Equal Sharing method and the Downstream Equal Sharing method coincide with the conjunctive permission value (van den Brink and Gilles, 1996) of an associated game with a permission structure, which is obtained as the Shapley value of an associated restricted game. Two main advantages of this approach are (i) we obtain new axiomatizations of the two sharing methods based on axiomatizations of the conjunctive permission value, and (ii) by applying the alternative disjunctive permission value, obtained as the Shapley value of a different restricted game, we propose the new Upstream Limited Sharing method and provide an axiomatization.

Keywords: Polluted river; Cost sharing; Axiomatization; Permission values (search for similar items in EconPapers)
JEL-codes: C71 D61 D62 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:gamebe:v:108:y:2018:i:c:p:182-205