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

David Wettstein (), David Pérez-Castrillo and Ines Macho-Stadler
Authors registered in the RePEc Author Service: David Perez-Castrillo

No 119, Working Papers from Barcelona School of Economics

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: shapley value; Externalities; sharing the surplus (search for similar items in EconPapers)
JEL-codes: C71 D62 (search for similar items in EconPapers)
Date: 2015-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Working Paper: Sharing the surplus: A just and efficient proposal for environments with externalities (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:119

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