An efficient and almost budget balanced cost sharing method
For a convex technology C we characterize cost sharing games where the Nash equilibrium demands maximize total surplus. Budget balance is possible if and only if C is polynomial of degree n-1 or less. For general C, the residual* cost shares are balanced if at least one demand is null, a characteristic property. If the cost function is totally monotone, a null demand receives cash and total payments may exceed actual cost. The ratio of excess payment to efficient surplus is at most . For power cost functions, C(a)=ap, p>1, the ratio of budget imbalance to efficient surplus vanishes as . For analytic cost functions, the ratio converges to zero exponentially along a given sequence of users. All asymptotic properties are lost if the cost function is not smooth.
Year of publication: |
2010
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Authors: | Moulin, Hervé |
Published in: |
Games and Economic Behavior. - Elsevier, ISSN 0899-8256. - Vol. 70.2010, 1, p. 107-131
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Publisher: |
Elsevier |
Saved in:
Online Resource
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