Sharing the Cost of Redundant Items

Jens Hougaard (jlh@ifro.ku.dk) and Herve Moulin

No 06_2012, MSAP Working Paper Series from University of Copenhagen, Department of Food and Resource Economics

Abstract: We ask how to share the cost of finitely many public goods (items) among users with different needs: some smaller subsets of items are enough to serve the needs of each user, yet the cost of all items must be covered, even if this entails inefficiently paying for redundant items. Typical examples are network connectivity problems when an existing (possibly inefficient) network must be maintained. We axiomatize a family of simple usage indices, one for each agent and for each item, measuring the relative worth of this item across agents, and generating cost sharing rules additive in costs.

Keywords: Cost sharing; Redundant costs; Connection networks; Connectivity (search for similar items in EconPapers)
JEL-codes: C71 D30 D85 M41 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2012-09
New Economics Papers: this item is included in nep-gth, nep-mic, nep-net and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Sharing the cost of redundant items (2014)
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