Sharing the cost of the polluted river: a class of bilateral compensation methods

Dongshuang Hou (), Yifan Feng (), Panfei Sun () and Hao Sun ()
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Dongshuang Hou: Northwestern Polytechnical University
Yifan Feng: Northwestern Polytechnical University
Panfei Sun: Northwestern Polytechnical University
Hao Sun: Northwestern Polytechnical University

OR Spectrum: Quantitative Approaches in Management, 2024, vol. 46, issue 4, No 7, 1264 pages

Abstract: Abstract Water pollution is harmful to people’s health and causes great damage to ecology. Cleaning up pollutants in cross-boundary river requires joint action of agents along the river. In this paper, we deal with the polluted river cost sharing problem in a cooperative situation. We first introduce a class of bilateral compensation methods (shortly the BC method), which are generalizations of the famous cost allocations, such as Upstream Equal Sharing method and Downstream Equal Sharing method. Then, we investigate the relationship between the BC method and the Shapley value of a special responsibility cost game. Also, we illustrate the stability of the BC method by studying the concavity of the corresponding cost game. Moreover, we provide two axiomatic characterizations of the BC method.

Keywords: Game theory; Cost allocation; The bilateral compensation method; Axiomatization; The Shapley value; 91A12 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s00291-023-00738-8

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