Individual Pricing Cannot Handle Variable Demands: Budget Balance Requires Acknowledging Interdependence

7 Pages Posted: 1 Aug 2016

See all articles by Justin Leroux

Justin Leroux

HEC Montreal - Institute of Applied Economics; CIRANO

Etienne Billette de Villemeur

University of Lille I - EQUIPPE

Date Written: May 26, 2016

Abstract

Budget balance cannot be achieved if rates depend upon individual agents' own consumption only, which we refer to as individualistic pricing. Thus, interdependence between agents should be accounted for, for example by taking total consumption into account explicitly.

Keywords: Cost sharing, budget balance, non-linear costs, externalities

JEL Classification: D62

Suggested Citation

Leroux, Justin and de Villemeur, Etienne Billette, Individual Pricing Cannot Handle Variable Demands: Budget Balance Requires Acknowledging Interdependence (May 26, 2016). Available at SSRN: https://ssrn.com/abstract=2816063 or http://dx.doi.org/10.2139/ssrn.2816063

Justin Leroux (Contact Author)

HEC Montreal - Institute of Applied Economics ( email )

3000, ch. de la Côte-Ste-Catherine
Montréal, Quebec H3T 2A7
Canada

CIRANO ( email )

2020 rue University, 25th floor
Montreal H3C 3J7, Quebec
Canada

Etienne Billette De Villemeur

University of Lille I - EQUIPPE

Université Lille 1 Sciences et Technologies
Faculté des Sciences Economiques et Sociales
Villeneuve d'Ascq, 59655
France

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