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Consistency requirements and pattern methods in cost sharing problems with technological cooperation

Eric Bahel () and Christian Trudeau ()

International Journal of Game Theory, 2018, vol. 47, issue 3, 737-765

Abstract: Abstract Using the discrete cost sharing model with technological cooperation, we investigate the implications of the requirement that demand manipulations must not affect the agents’ shares. In a context where the enforcing authority cannot prevent agents (who seek to reduce their cost shares) from splitting or merging their demands, the cost sharing methods used must make such artifices unprofitable. The paper introduces a family of rules that are immune to these demand manipulations, the pattern methods. Our main result is the characterization of these methods using the above requirement. For each one of these methods, the associated pattern indicates how to combine the technologies in order to meet the agents’ demands. Within this family, two rules stand out: the public Aumann–Shapley rule, which never rewards technological cooperation; and the private Aumann–Shapley rule, which always rewards technology providers. Fairness requirements imposing natural bounds (for the technological rent) allow to further differentiate these two rules.

Keywords: Cost sharing; Demand manipulations; Flow method; Production pattern (search for similar items in EconPapers)
JEL-codes: C71 D63 (search for similar items in EconPapers)
Date: 2018
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Working Paper: Consistency Requirements and Pattern Methods in Cost Sharing Problems with Technological Cooperation (2012) Downloads
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