Fair waste pricing: an axiomatic analysis to the NIMBY problem (Q431230): Difference between revisions

An axiomatic framework is provided to analyze the following problem. A waste disposal facility has to be sited in one of several districts producing different amounts of waste. The construction cost of the facility depends on where it is sited. When a district accepts the facility, it bears a disutility. The problem is to choose a siting district and to share the construction cost while considering fair compensation for the siting district. A fair pricing rule is one that selects a district so as to minimize the social loss, applies a negative price to waste according to the social loss involved, and provides full compensation to the siting district. It is shown that this rule is the unique rule that satisfies certain requirements of efficiency, fairness, and robustness regarding the strategic transfers of waste. The nearly robustness of this rule to the misrepresentation of disutility information is also established.