Munich Personal RePEc Archive

Cost-allocation principles for pipeline capacity and usage

Salant, David and Watkins, G.C. (1996): Cost-allocation principles for pipeline capacity and usage. Published in: Energy Studies Review , Vol. 8, No. 2 (1996): pp. 91-101.

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Abstract

This paper applies principles f rom game theory to the problem o f allocating the cost o f a shared facility, such as a pipeline. The theory o f cooperative games s t r ongl y suggest s t hat no method e x i s t s for allocating costs that wi l l achieve all major policy goals. We apply results from the theory o f cooperative games a n d principles o f cost allocation to assess some c o mmo n l y adopted rules for allocating costs and def i ni ng u n i t charges. Mos t notably, the postage-stamp toll is f o u n d to fail a mi ni mal set o f commonly applied principles.

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