An Egalitarian Approach for Sharing the Cost of a Spanning Tree

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

No 19-3, 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. Hence the question is how to fairly allocate the total cost among these agents. Our approach, reinterpreting the spanning tree cost allocation as a claims problem (O'Neill, 1982), defines a simple way to allocate the optimal cost with two main criteria: (1) each individual only pays attention to a few connection costs (the total cost of the optimal network and the cost of connecting by himself to the source); and (2) an egalitarian criteria is used to share costs or benefits. Then, by using claims rules, we define two egalitarian solutions so that the total cost is allocated equalizing either the payments in which agents incur, or the benefit that agents obtain throughout cooperation. Finally, through the axiomatic study of core selection, we obtain an alternative interpretation of the Folk solution.

Keywords: Minimum cost spanning tree; Egalitarian; Cost sharing; Core (search for similar items in EconPapers)
JEL-codes: C71 D63 D71 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2019-06-12
New Economics Papers: this item is included in nep-gth
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: An egalitarian approach for sharing the cost of a spanning tree (2020)
Working Paper: An egalitarian approach for sharing the cost of a spanning tree (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:qmetal:2019_003

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