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A `Solidarity' Approach to the Problem of Sharing a Network Cost

José M. Giménez-Gómez (), Josep E. Peris () and Begoña Subiza ()
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José M. Giménez-Gómez: Universitat Rovira i Virgili, Departament d'Economia and CREIP, Postal: Av.Universitat 1,, 43204 Reus,, Spain.

No 16-5, QM&ET Working Papers from University of Alicante, D. Quantitative Methods and Economic Theory

Abstract: A minimum cost spanning tree problem analyzes the way to efficiently connect individuals to a source when they are located at different places. Several rules have been defined to solve this problem. Our objective here is to propose a new approach that differentiates some costs that may deserve compensations (involuntary costs) from some other connection costs that may be considered voluntary. We therefore define a solidarity egalitarian solution, through which, the total cost is allocated by considering pay-backs to equalize the involuntary costs, thus fulfilling the weak stability condition of individual rationality.

Keywords: Minimum cost spanning tree; Solidarity; Cost sharing; Egalitarian (search for similar items in EconPapers)
JEL-codes: C71 D63 D71 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gth
Date: 2016-11-07
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