Decentralized pricing in minimum cost spanning trees

TY - JOUR

T1 - Decentralized pricing in minimum cost spanning trees

AU - Hougaard, Jens Leth

AU - Moulin, Hervé

AU - Østerdal, Lars Peter Raahave

PY - 2010

Y1 - 2010

N2 - In the minimum cost spanning tree model we consider decentralized pricing rules, i.e., rules that cover at least the efficient cost while the price charged to each user only depends upon his own connection costs. We define 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 efficient cost while the price charged to each user only depends upon his own connection costs. We define 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.

U2 - 10.1007/s00199-009-0485-6

DO - 10.1007/s00199-009-0485-6

M3 - Journal article

SN - 0938-2259

VL - 44

SP - 293

EP - 306

JO - Economic Theory

JF - Economic Theory

IS - 2

ER -