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| Author: | Frutos, M. A. de |
| Title: | Decreasing serial cost sharing under economies of scale |
| Journal: | Journal of Economic Theory
1998 : APR, VOL. 79:2, p. 245-275 |
| Index terms: | ECONOMIES OF SCALE CONSUMERS COSTS |
| Language: | eng |
| Abstract: | In the paper, the problem of cost sharing is considered in the presence of increasing returns to scale and potential strategic behavior on the part of consumers. It is shown that any smooth and strictly monotonic mechanism for which a Nash equilibrium exists for all profiles of convex and monotonic preferences must be dictatorial. However, it is proposed a cost sharing mechanism, the decreasing serial mechanism, for which an interesting domain restriction ensures existence of a noncooperative equilibrium for its cost sharing game. A theorem of the mechanism based on the strategic properties of existence, uniqueness, and efficiency of its non-cooperative equilibrium is provided. |
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