Minimum cost connection networks: truth-telling and implementation

Research output: Working paperResearch

In the present paper we consider the allocation of cost in connection networks. Agents have connection demands in form of pairs of locations they want to be connected. Connections between locations are costly to build. The problem is to allocate costs of networks satisfying all connection demands. We use three axioms to characterize allocation rules that truthfully implement cost minimizing networks satisfying all connection demands in a game where: (1) a central planner announces an allocation rule and a cost estimation rule; (2) every agent reports her own connection demand as well as all connection costs; and, (3) the central planner selects a cost minimizing network satisfying reported connection demands based on estimated connection costs and allocates true connection costs of the selected network.
Original languageEnglish
PublisherDepartment of Food and Resource Economics, University of Copenhagen
Number of pages20
Publication statusPublished - 2013
SeriesMSAP Working Paper Series
Number03/2013

ID: 105344529