Template-Type: ReDIF-Paper 1.0
Author-Name:  Jens Leth Hougaard
Author-Name-First: Jens Leth
Author-Name-Last: Hougaard
Author-Email: jlh@foi.ku.dk
Author-Workplace-Name: Department of Food and Resource Economics, University of Copenhagen
Author-Name:  Mich Tvede
Author-Name-First: Mich
Author-Name-Last: Tvede
Author-Email:  mich.tvede@econ.ku.dk
Author-Workplace-Name: Department of Economics, University of Copenhagen
Title:  Incremental Cost Sharing in Chains and Fixed Trees
Abstract: In this paper we consider a family of cost allocation rules for which agents pay a share of their incremental cost as well as of any ‘debt’ from prior agents. This family encompasses the Bird rule and the free riding rule (where terminal agents pay everything) as the two extreme cases. By axiomatic characterization it is demonstrated that a distinguishing feature of this family is that payments are independent of both the costs and the number of downstream agents.
Length: 12 pages
Creation-Date:  2011
File-URL: http://okonomi.foi.dk/workingpapers/MSAPpdf/MSAP2011/MSAP_WP02_2011.pdf
File-Format: Application/pdf
Number: 02_2011
Classification-JEL:
Keywords: Cost allocation, Axiomatic characterization, Bird allocation, Incremental cost sharing
Handle: RePEc:foi:msapwp:02_2011