Minimum cost spanning extension problems: The proportional rule and the decentralized rule

Abstract

Minimum cost spanning extension problems are generalizations of minimum cost spanning tree problems (see Bird 1976) where an existing network has to be extended to connect users to a source. In this paper, we present two cost allocation rules for these problems, viz. the proportional rule and the decentralized rule. We introduce algorithms that generate these rules and prove that both rules are refinements of the irreducible core, as defined in Feltkamp, Tijs and Muto (1994b). We then proceed to axiomatically characterize the proportional rule.Networks;Cost Allocation;costs and cost price