Accurate cost allocation is a challenge for both public service operators and regulatory bodies, given the dual objectives of ensuring essential public service provision and maintaining fair competition. Operators have the obligation to provide essential public services for all individuals, which may incur additional costs. To compensate this, the operators receive state aids, which are determined by an assessment of the net cost associated with these obligations. However, these aids introduce the risk of distorting competition, as operators may employ them to subsidize competitive activities. To avoid this risk, a precise cost allocation method that adequately assess the net cost of these obligations becomes necessary. Such a method must satisfy specific properties that effectively prevent cross-subsidization. In this paper, we propose a method grounded in cooperative game theory that offers a solution for allocating common costs between activities and obligations in public service provision. We adopt a normative approach by introducing a set of desirable axioms that prevent cross-subsidization. We provide two characterizations of our proposed solution on the basis of these axioms. Furthermore, we present an illustration of our method to the allocation of common costs for a public service operator.
In this paper, I optimize and allocate the costs of a non-rival common-pool resource among several users. In such a so-called schedule situation the players have different demands given by distinct subsets of periods satisfying their needs. The total costs resulting from shared use of the resource are allocated by natural allocations called Equal Pooling allocations, in which the cost of each needed period is shared equally among the users of this period. The associated schedule game gives, for each coalition of players, the minimal cost of a period configuration satisfying the needs of all its members. I have three main contributions. First, I provide several sufficient conditions for the non-emptiness of the core of a schedule game. Second, I prove that under some of these conditions the Shapley value is in the core and coincides with some Equal pooling allocation. Third, I establish connections with other classes of operational research games. Furthermore, I present an application to the allocation of the common costs of the mail carrier route of La Poste, the french postal operator.
We address the issue of allocating the costs of cleaning non-point source pollution originating from industrial sites among the firms responsible for these sites. The bilateral liabilities between firms are depicted by an undirected graph. We introduce and axiomatically characterize two cost allocation rules, which are inspired from the Polluter-Pays and Beneficiary-Pays principles commonly referenced in environmental law. The first rule allocates the cleanup costs of a site equally among the firms potentially contributing to the environmental damage. In contrast, the second rule assigns each firm the full cost of cleaning its own production site. Furthermore, we establish links with cooperative game theory to demonstrate the stability of these allocation rules.
We consider cooperative TU-games with unpaid players, which are described by a TU- game and two categories of players, paid and unpaid. Unpaid players participate in the cooperative game but are not rewarded for their participation, for instance for legal reasons. The objective is then to determine how the contributions of unpaid players are redistributed among the paid players. To meet this goal, we introduce and characterize axiomatically three values that are inspired by the Shapley value but dier in the way they redistribute the contributions of unpaid players. These values are unied as instances of a more general two-step allocation procedure.
This article deals with the allocation of benefits among workers with different contributions. More specifically, workers are involved in completing a set of tasks. For each task, a worker can be necessary, if the task cannot be completed without their participation, or optional if their participation, alongside necessary workers, enhances the quality of the task's execution. Worker could also be superfluous if he contributes nothing to the execution of the task The benefit generated by completing a task therefore depends on the composition of the group of workers assigned to it. The main objective is to fairly allocate the total benefit generated by all workers. Several allocation methods are proposed, each considering the role of workers differently. Their relevance is then studied using a cooperative game framework and a normative approach. The results of this theoretical model are also intended to be applied in a labor law context.
Léa Munich, 2023. "Cost Allocation and Cooperative Game Theory," Topics in Regulatory Economics and Policy, in: Pier Luigi Parcu & Timothy J. Brennan & Victor Glass (ed.), The Postal and Delivery Contribution in Hard Times, pages 299-311, Springer. RePEc.
Olga Bohorquez Suarez and Léa Munich, 2023. "Allocating Fixed Costs of the Outdoor Delivery: A Cooperative Game Approach," Topics in Regulatory Economics and Policy, in: Pier Luigi Parcu & Timothy J. Brennan & Victor Glass (ed.), Postal Strategies, pages 253-268, Springer. RePEc.