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On how to allocate the fixed cost of transport systems

Author

Listed:
  • Teresa Estañ

    (Universidad Miguel Hernández de Elche)

  • Natividad Llorca

    (Universidad Miguel Hernández de Elche)

  • Ricardo Martínez

    (Universidad de Granada)

  • Joaquín Sánchez-Soriano

    (Universidad Miguel Hernández de Elche)

Abstract

In this study, we consider different cities located along a tram line. Each city may have one or several stations and information is available about the flow of passengers between any pair of stations. A fixed cost (salaries of the executive staff, repair facilities, or fixed taxes) must be divided among the cities. This cost is independent of the number of passengers and the length of the line. We propose a mathematical model to identify suitable mechanisms for sharing the fixed cost. In the proposed model, we study, and characterize axiomatically, three rules, which include the uniform split, the proportional allocation and an intermediate situation. The analyzed axioms represent the basic requirements for fairness and elemental properties of stability.

Suggested Citation

  • Teresa Estañ & Natividad Llorca & Ricardo Martínez & Joaquín Sánchez-Soriano, 2021. "On how to allocate the fixed cost of transport systems," Annals of Operations Research, Springer, vol. 301(1), pages 81-105, June.
    • Handle: RePEc:spr:annopr:v:301:y:2021:i:1:d:10.1007_s10479-020-03645-1
    DOI: 10.1007/s10479-020-03645-1
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    3. Fatemeh Babaei & Hamidreza Navidi & Stefano Moretti, 2022. "A bankruptcy approach to solve the fixed cost allocation problem in transport systems," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 30(2), pages 332-358, July.
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    5. Hao Wu & Rene van den Brink & Arantza Estevez-Fernandez, 2022. "Highway toll allocation," Tinbergen Institute Discussion Papers 22-036/II, Tinbergen Institute.
    6. Mehdi Soltanifar & Farhad Hosseinzadeh Lotfi & Hamid Sharafi & Sebastián Lozano, 2022. "Resource allocation and target setting: a CSW–DEA based approach," Annals of Operations Research, Springer, vol. 318(1), pages 557-589, November.

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