Template-Type: ReDIF-Paper 1.0
Author-Name:  Jens Leth Hougaard
Author-Name-First: Jens Leth
Author-Name-Last: Hougaard
Author-Email: jlh@ifro.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-Workplace-Name: Newcastle University Business School, Newcastle University
Title:  Minimum Cost Connection Networks: Truth-telling and Implementation
Abstract: In the present paper we consider the allocation of cost in connection networks. Agents have connection demands in form of pairs of locations they want to be connected. Connections between locations are costly to build. The problem is to allocate costs of networks satisfying all connection demands. We use three axioms to characterize allocation rules that truthfully implement cost minimizing networks satisfying all connection demands in a game where: (1) a central planner announces an allocation rule and a cost estimation rule; (2) every agent reports her own connection demand as well as all connection costs; and, (3) the central planner selects a cost minimizing network satisfying reported connection demands based on estimated connection costs and allocates true connection costs of the selected network.
Length: 20 pages
Creation-Date:  2013-10
File-URL: http://okonomi.foi.dk/workingpapers/MSAPpdf/MSAP2013/MSAP_WP03_2013.pdf
File-Format: Application/pdf
Number: 03_2013
Classification-JEL: C70, C72, D71, D85
Keywords: axiomatic characterization, connection networks, cost sharing, implementation, truth-telling
Handle: RePEc:foi:msapwp:03_2013