Allocating fixed cost in transport systems

M. T. Estañ Pereña, N. Llorca Pascual, R. Martinez, J. Sánchez Soriano

In this study, we consider different cities located along a tram line. Each city may have one or several stations and information is available about the flow of passengers between any pair of stations. A fixed cost (salaries of the executive staff, repair facilities, or fixed taxes) must be divided among the cities. This cost is independent of the number of passengers and the length of the line. We propose a model to identify suitable mechanisms for sharing the cost. In the proposed model, which we characterize axiomatically, there are three rules comprising uniform splitting, proportional allocation, and an intermediate situation. In this work we propose, and characterize axiomatically, three rules, which include the uniform split, the proportional allocation and an intermediate situation. The analyzed axioms represent the basic requirements for fairness and elemental properties of stability.

Keywords: cost sharing equity transport

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