"Almost" subsidy-free spatial pricing in a multi-dimensional setting

A-Tier
Journal: Journal of Economic Theory
Year: 2008
Volume: 143
Issue: 1
Pages: 275-291

Authors (4)

Drèze, Jacques (not in RePEc) Le Breton, Michel (not in RePEc) Savvateev, Alexei (New Economic School (NES)) Weber, Shlomo (New Economic School (NES))

Score contribution per author:

1.005 = (α=2.01 / 4 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Consider a population of citizens uniformly spread over the entire plane. The population faces a problem of locating public facilities financed by its users, who face an idiosyncratic private access cost to the facility. We show that, under mild assumptions, an external intervention that covers a tiny portion of the facility cost is sufficient to guarantee secession-proofness or no cross-subsidization, where no group of individuals is charged more than the cost incurred if it had acted on its own. Moreover, we demonstrate that in this case the Rawlsian access pricing is the only mechanism that rules out secession threats.

Technical Details

RePEc Handle
repec:eee:jetheo:v:143:y:2008:i:1:p:275-291
Journal Field
Theory
Author Count
4
Added to Database
2026-01-25