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| Author: | Sprumont, Y. |
| Title: | Ordinal cost sharing |
| Journal: | Journal of Economic Theory
1998 : JUL, VOL. 81:1, p. 126-162 |
| Index terms: | MODELS ECONOMIC THEORY COSTS |
| Language: | eng |
| Abstract: | The paper asks how the best known mechanisms for solving cost sharing problems with homogenous cost functions - the value, proportional, and serial mechanisms - ought to be extended to arbitrary problems. The Ordinality axiom is proposed requiring that cost shares be invariant under all increasing transformations of the measuring scales. Following the value approach first, an axiomatization of the Shapley-Shubik rule is presented based on Ordinality. Next, two extensions of the serial mechanism are defined and axiomatized. Finally, it is noted that the Aumann-Shapley extension of the proportional mechanism is not ordinal. An alternative proportional extension which does satisfy Ordinality is proposed and defended. |
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