Sharing the surplus: A just and efficient proposal for environments with externalities

Ines Macho-Stadler, David Perez-Castrillo and David Wettstein ()

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: Economic activities, both on the macro and micro level, often entail wide-spread externalities. This in turn leads to disputes regarding the compensation levels to the various parties affected. We propose a general, yet simple, method of deciding upon the distribution of the gains (costs) of cooperation in the presence of externalities. This method is shown to be the unique one satisfying several desirable properties. Furthermore, we illustrate the use of this method to resolve the sharing of benefits generated by international climate control agreements.

Keywords: externalities; sharing the surplus; Shapley value. (search for similar items in EconPapers)
JEL-codes: C71 D62 (search for similar items in EconPapers)
Pages: 29
Date: 2004-04-27
New Economics Papers: this item is included in nep-mic and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Sharing the surplus: A just and efficient proposal for environments with externalities (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:611.04

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