Proportionally adjusted marginal pricing method to share joint costs
Wang, YungTong (2002) Proportionally adjusted marginal pricing method to share joint costs. Review of economic design, 7 (2). pp. 205-211. ISSN 1434-4750
We consider the cost sharing problem with divisible demands of heterogeneous goods. We propose a cost sharing method called Proportionally Adjusted Marginal Pricing (PAMP) method. PAMPis a nonadditive (in the cost function) extension of average cost pricing.We introduce an axiom called Local Independence (LI) and use LI together with Continuity, Proportionality, and Scale Invariance to characterize PAMP.
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