Cost-allocation principles for pipeline capacity and usage

David Salant and G.C. Watkins

MPRA Paper from University Library of Munich, Germany

Abstract: This paper applies principles f rom game theory to the problem o f allocating the cost o f a shared facility, such as a pipeline. The theory o f cooperative games s t r ongl y suggest s t hat no method e x i s t s for allocating costs that wi l l achieve all major policy goals. We apply results from the theory o f cooperative games a n d principles o f cost allocation to assess some c o mmo n l y adopted rules for allocating costs and def i ni ng u n i t charges. Mos t notably, the postage-stamp toll is f o u n d to fail a mi ni mal set o f commonly applied principles.

Keywords: cost allocation; pipeline (search for similar items in EconPapers)
JEL-codes: L51 L95 (search for similar items in EconPapers)
Date: 1996
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Published in Energy Studies Review 2.8(1996): pp. 91-101

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:12090

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