Three methods to share joint costs or surplus

Article Abstract:

The allocation of joint costs is a significant problem in accounting, public utility pricing and management while the allocation of joint surplus has an wider extent, applicable to the common production of common and private goods, electricity pricing and the allotment of waiting time for computer network users. The relationship of cost sharing with the variable demands of heterogenous goods, additive in the cost function and agreement with the dummy axiom were examined. Four axioms considered were scale invariance, demand monotonicity, upper bound for homogeneous goods and average cost pricing for homogeneous goods. It was discovered that various combinations of the axioms were in agreement with additivity and the dummy axiom.

Economic aspects, Surplus (Accounting), Allocation (Accounting)

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Multi-product serial cost sharing: an incompatibility with the additivity axiom

Article Abstract:

The applicability of additivity axiom in evaluating the incentive and equity features of serial cost sharing is examined under multi-product environments. The additivity axiom, which applies equal cost distribution when considering production cost and its separate additive components, fails to explain the serial cost sharing rule when used in multi-product settings. The failure is attributed to the diverse specifications of the multi-product setting which requires specific axiomatic properties.

Production (Economics), Additive functions

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The congruence axiom and path independence

Article Abstract:

The connection between path independence and transitive rationalization of a choice function in a general domain where a choice function may not include all possible non-empty subsets of the universal set was examined. By describing a sequential choice procedure, the study demonstrated that the requirement of path independence of a choice function was equivalent to Richter's Congruence Axiom. This, in turn, translated to its transitive rationalization.

Functions (Mathematics), Congruences and residues, Congruences (Mathematics), Functions

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