A Probabilistic Approach To Joint Cost Allocation in Public Projects

John G. Hof and Doug Rideout
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John G. Hof: USDA Forest Service
Doug Rideout: Colorado State University

Public Finance Review, 1993, vol. 21, issue 4, 399-414

Abstract: It is well known that joint cost allocations should not be used in making output decisions, but they might be required for budgeting or accounting purposes. This article develops approaches to joint cost allocation that minimize the chance of disturbing a correctly determined output set when cost information is not known with certainty. The approaches developed are shown in a case example to have the potential to substantially decrease the chance of cost allocations motivating output distortions, relative to extant methods.

Date: 1993
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:21:y:1993:i:4:p:399-414

DOI: 10.1177/109114219302100403

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