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Accounting for Needs in Cost Sharing

Author

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  • Billette de Villemeur, Etienne
  • Leroux, Justin

Abstract

We introduce basic needs in cost-sharing problems so that agents with higher needs are not penalized, all the while holding them responsible for their consumption. We characterize axiomatically two families of cost-sharing rules, each favoring one aspect—compensation or responsibility—over the other. We also identify specific variants of those rules that protect small users from the cost externality imposed by larger users. Lastly, we show how one can implement these schemes with realistic informational assumptions; i.e., without making explicit interpersonal comparisons of needs and consumption.

Suggested Citation

  • Billette de Villemeur, Etienne & Leroux, Justin, 2016. "Accounting for Needs in Cost Sharing," MPRA Paper 73434, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:73434
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    File URL: https://mpra.ub.uni-muenchen.de/118902/1/MPRA_paper_118902.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Cost Sharing; Needs; Responsibility; Liberal Egalitarianism;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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