Consistent cost sharing

Abstract

A new concept of consistency for cost sharing solutions is discussed, analyzed, and related to the homonymous and natural property within the rationing context. Main result is that the isomorphism in Moulin and Shenker (J Econ Theory 64:178-201, 1994) pairs each additive and consistent single-valued mechanism with a corresponding monotonic and consistent rationing method. Then this answers the open question in Moulin (Econometrica 68:643-684, 2000; Handbook of social choice and welfare. Handbooks in economics, pp 289-357, 2002) whether such notion for cost sharing exists. The conclusion is that renown solutions like the average and serial cost sharing mechanisms are consistent, whereas the Shapley-Shubik mechanism is not. Average cost sharing is the only strongly consistent element in this class. The two subclasses of incremental and parametric cost sharing mechanisms are further analyzed as refinement of the main result. © The Author(s) 2011.