Paul Williams (London School of Economics)

The allocation of shared fixed costs
Wednesday 23 November 2005 at 15.30, JCMB 5327


We consider the problem of sharing the fixed costs of facilities among a number of users. Although the problem can be formulated and solved as an Integer Programme this provides limited accounting information. We do , however, consider the application of Gomory-Chvatal cuts as a partial solution to the problem. In addition we consider the issue of fairness among different possible cost allocations and how such `fair' costs may be derived. Finally we suggest that the only really satisfactory solution is to separate the problem of allocation of facilities from that of allocating costs ie separate the resource allocation problem from the regulatory problem.

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