Strategy-Proof Cost Sharing under Increasing Returns: Improvement of the Supremal Welfare Loss

Kazuhiko Hashimoto () and Hiroki Saitoh ()
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Kazuhiko Hashimoto: Graduate School of Economics, Kobe University
Hiroki Saitoh: Faculty of Economics, Kyoto Gakuen University

No 1014, Discussion Papers from Graduate School of Economics, Kobe University

Abstract: We consider a mechanism design problem in economies with increasing returns. We construct a new class of rules, called w-hybrid rules, and characterize them by strategy-proofness, budget-balance, anonymity, envy-freeness, consumer sovereignty and non-bossiness. We also show that w-hybrid rules improve the supremal welfare loss compared with the average cost pricing rule [Moulin (1999) and Moulin and Shenker (2001)].

Pages: 36pages
Date: 2010-11
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Persistent link: https://EconPapers.repec.org/RePEc:koe:wpaper:1014

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