“Almost” subsidy-free spatial pricing in a multi-dimensional setting

Jacques Dreze, Michel Le Breton, Alexey Savvateev () and Shlomo Weber ()

No 2007047, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Consider a population of citizens uniformly spread over the entire plane, that faces a problem of locating public facilities to be used by its members. The cost of every facility is financed by its users, who also face an idiosyncratic private access cost to the facility. We assume that the facilities' cost is independent of location and access costs are linear with respect to the Euclidean distance. We show that an external intervention that covers 0.19% of the facility cost is sufficient to guarantee secession-proofness or no cross-subsidization, where no group of individuals is charged more than its stand alone cost incurred if it had acted on its own. Moreover, we demonstrate that in this case the Rawlsian access pricing is the only secession-proof allocation.

Keywords: secession-proofness; optimal jurisdictions; Rawlsian allocation; hexagonal partition; cross-subsidization (search for similar items in EconPapers)
JEL-codes: D70 H20 H73 (search for similar items in EconPapers)
Date: 2007-07-01
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: "Almost" subsidy-free spatial pricing in a multi-dimensional setting (2008)
Working Paper: 'Almost' Subsidy-free Spatial Pricing in a Multi-dimensional Setting (2007)
Working Paper: ‘Almost’ subsidy-free spatial pricing in a multi-dimensional setting (2007)
Working Paper: “Almost” Subsidy-free Spatial Pricing in a Multi-dimensional Setting (2007)
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