- A PROCEDURE FOR SHARING RECYCLING COSTS

Jose Alcalde and Jose Silva

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: This paper examines a situation in which the production activities of different agents, in a common geographical location, create waste products that are either of a similar biological or chemical composition or offer commercially compatible combinations. What we propose here, therefore, is a cost-sharing model for the of recycling of their waste products. We concentrate, however, on the specific case in which the agents' activities are heterogeneous. We first examine, from a normative point of view, the cost-sharing rule, which we shall call the multi-commodity serial (MCS) rule. We introduce a property, that we call Cost-Based Equal Treatment, and we demonstrate that the unique rule verifying the Serial Principle and this property is the MCS rule. We then deal with the analysis of the agents' strategic behavior when they are allowed to select their own production levels, in which case the total cost is then split, in accordance with the MCS rule. We show that there is only one Nash equilibrium, which is obtained from an interactive elimination of dominated strategies.

Keywords: Cost Sharing Rules; Serial Cost Sharing; Dominance Solvability. (search for similar items in EconPapers)
JEL-codes: C71 C72 D62 D63 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2000-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2000-14

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