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An Axiomatic Approach to the Airline Emission Fees Problem

Author

Listed:
  • Yuntong Wang

    (Department of Economics, University of Windsor)

Abstract

An airline lands in a number of airports in a region. An airport serves a number of airlines. Each airport charges a given amount of emission fees to those airlines using the airport. The total emission fees from all airports in the region must be shared among all airlines. We propose an axiomatic approach to this airline emission fees problem. We suggest a sharing rule called the Decomposition rule that is based on a few simple axioms. The Decomposition rule coincides with the Shapley value of the game associated with the problem and is shown in the core. Thus, no alliance of airlines can reduce their emission fees by forming an independent coalition. On the other hand, we also show that the Decomposition rule is split-proof. In other words, no airline has an incentive to split into two or more airlines.

Suggested Citation

  • Yuntong Wang, 2013. "An Axiomatic Approach to the Airline Emission Fees Problem," Working Papers 1308, University of Windsor, Department of Economics.
    • Handle: RePEc:wis:wpaper:1308
    as

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    File URL: http://web2.uwindsor.ca/economics/RePEc/wis/pdf/1308.pdf
    File Function: First version, 2013
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    References listed on IDEAS

    as
    1. Yves Sprumont, 2005. "On the Discrete Version of the Aumann-Shapley Cost-Sharing Method," Econometrica, Econometric Society, vol. 73(5), pages 1693-1712, September.
    2. Moulin, Herve, 2002. "Axiomatic cost and surplus sharing," Handbook of Social Choice and Welfare, in: K. J. Arrow & A. K. Sen & K. Suzumura (ed.), Handbook of Social Choice and Welfare, edition 1, volume 1, chapter 6, pages 289-357, Elsevier.
    3. Hougaard, Jens Leth & Moulin, Hervé, 2014. "Sharing the cost of redundant items," Games and Economic Behavior, Elsevier, vol. 87(C), pages 339-352.
    4. S. C. Littlechild & G. Owen, 1973. "A Simple Expression for the Shapley Value in a Special Case," Management Science, INFORMS, vol. 20(3), pages 370-372, November.
    5. Moulin, Herve & Laigret, Francois, 2011. "Equal-need sharing of a network under connectivity constraints," Games and Economic Behavior, Elsevier, vol. 72(1), pages 314-320, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Airline emission fees; Shapley value; core; split-proofness.;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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