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Sharing the cost of the polluted river: a class of bilateral compensation methods

Author

Listed:
  • Dongshuang Hou

    (Northwestern Polytechnical University)

  • Yifan Feng

    (Northwestern Polytechnical University)

  • Panfei Sun

    (Northwestern Polytechnical University)

  • Hao Sun

    (Northwestern Polytechnical University)

Abstract

Water pollution is harmful to people’s health and causes great damage to ecology. Cleaning up pollutants in cross-boundary river requires joint action of agents along the river. In this paper, we deal with the polluted river cost sharing problem in a cooperative situation. We first introduce a class of bilateral compensation methods (shortly the BC method), which are generalizations of the famous cost allocations, such as Upstream Equal Sharing method and Downstream Equal Sharing method. Then, we investigate the relationship between the BC method and the Shapley value of a special responsibility cost game. Also, we illustrate the stability of the BC method by studying the concavity of the corresponding cost game. Moreover, we provide two axiomatic characterizations of the BC method.

Suggested Citation

  • Dongshuang Hou & Yifan Feng & Panfei Sun & Hao Sun, 2024. "Sharing the cost of the polluted river: a class of bilateral compensation methods," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 46(4), pages 1241-1264, December.
    • Handle: RePEc:spr:orspec:v:46:y:2024:i:4:d:10.1007_s00291-023-00738-8
    DOI: 10.1007/s00291-023-00738-8
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