Average Cost Pricing Versus Serial Cost Sharing: An Axiomatic Comparison

TitleAverage Cost Pricing Versus Serial Cost Sharing: An Axiomatic Comparison
Publication TypeJournal Article
Year of Publication1994
AuthorsMoulin, H., & Shenker S.
Published inJournal of Economic Theory
Volume64
Issue1
Page(s)178-201
Other Numbers3503
Abstract

A finite group of agents share a (one output) production function. A cost sharing rule allocates the total cost among the users for every conceivable profile of output demands. We investigate the space of possible cost sharing rules from an axiomatic perspective. We provide two characterizations of average cost pricing, one based on the axioms of Additivity and Monotonicity (both with respect to the cost function), and the other based on the axioms of Additivity and a version of Consistency. We also provide a characterization of serial cost sharing based, essentially, on Additivity and a Free Lunch axiom.

Bibliographic Notes

Journal of Economic Theory, Vol. 64, No. 1, pp. 178-201

Abbreviated Authors

H. Moulin and S. Shenker

ICSI Research Group

Networking and Security

ICSI Publication Type

Article in journal or magazine