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Proportionally adjusted marginal pricing method to share joint costs. (English) Zbl 1046.91043
Summary: We consider the cost sharing problem with divisible demands of heterogeneous goods. We propose a cost sharing method called Proportionally Adjusted Marginal Pricing (PAMP) method. PAMP is a nonadditive (in the cost function) extension of average cost pricing. We introduce an axiom called Local Independence (LI) and use LI together with continuity, proportionality, and scale invariance to characterize PAMP.
MSC:
91B24 Microeconomic theory (price theory and economic markets)
91B32 Resource and cost allocation (including fair division, apportionment, etc.)
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