Egalitarian-equivalent cost sharing of a public good. (English) Zbl 0619.90004

Moulin, Hervé

Econometrica 55, 963-976 (1987).

In an economy with one public and one private good, egalitarian- equivalent cost sharing consists of finding the highest public good level \(x^*\) such that consuming x* for free yields a feasible utility distribution. The corresponding feasible allocation (typically unique), called egalitarian-equivalent, is in the core of the economy.
Conversely, any cost sharing method satisfying: (i) Pareto optimality, (ii) cost monotonicity (nobody suffers a utility loss if the production technology improves upon, ceteris paribus), and (iii) individual rationality (no single agent coalition objects) or (iii’) no private transfers (no agent receives a positive amount of private good), must select a egalitarian-equivalent allocation in every economy.

MSC:

91B14	Social choice
91A40	Other game-theoretic models

Keywords:

cost-sharing; egalitarian-equivalent cost sharing; public good; core; Pareto optimality; cost monotonicity