Decentralized Pricing in Minimum Cost Spanning Trees

TY - UNPB

T1 - Decentralized Pricing in Minimum Cost Spanning Trees

AU - Hougaard, Jens Leth

AU - Moulin, Hervé

AU - Østerdal, Lars Peter

PY - 2008

Y1 - 2008

N2 - In the minimum cost spanning tree model we consider decentralized pricing rules, i.e. rules that cover at least the ecient cost while the price charged to each user only depends upon his own connection costs. We de ne a canonical pricing rule and provide two axiomatic characterizations. First, the canonical pricing rule is the smallest among those that improve upon the Stand Alone bound, and are either superadditive or piece-wise linear in connection costs. Our second, direct characterization relies on two simple properties highlighting the special role of the source cost.

AB - In the minimum cost spanning tree model we consider decentralized pricing rules, i.e. rules that cover at least the ecient cost while the price charged to each user only depends upon his own connection costs. We de ne a canonical pricing rule and provide two axiomatic characterizations. First, the canonical pricing rule is the smallest among those that improve upon the Stand Alone bound, and are either superadditive or piece-wise linear in connection costs. Our second, direct characterization relies on two simple properties highlighting the special role of the source cost.

KW - Faculty of Social Sciences

KW - pricing rule

KW - canonical pricing rule

KW - stand-alone cost

KW - decentralization

M3 - Working paper

BT - Decentralized Pricing in Minimum Cost Spanning Trees

PB - Department of Economics, University of Copenhagen

ER -