Abstract
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 here is to choose a siting district and to share the construction cost while considering fair compensation for the siting district. We provide an axiomatic framework to analyze this problem and seek normatively desirable and practical decision rules. 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. We show that this rule is a unique rule that satisfies certain requirements of efficiency, fairness, and robustness regarding the strategic transfers of waste. We then establish the nearly robustness of this rule to the misrepresentation of disutility information.
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This paper is a much extended version of Chapter 2 of my dissertation submitted to the University of Rochester in March 2005, and was formerly circulated as “A Normative Theory for the NIMBY Problem”. I am most grateful to my advisor William Thomson for his continuous encouragement and support, and Fuhito Kojima and Yusuke Samejima for their very valuable comments. I also thank helpful comments from an associate editor, a referee, John Duggan, Steven Gonek, Eiji Hosoda, Tatsuro Ichiishi, Ryoichi Nagahisa, Shinsuke Nakamura, Yoshiyasu Ono, Josef Perktold, Shigehiro Serizawa, Koichi Tadenuma, Koji Takamiya, Gávor Virág, Naoki Watanabe, and Naoki Yoshihara. Various versions of this paper were presented at the seminars at Chuo University, Concordia University, Hitotsubashi University, Institute of Developing Economies, Keio University, Kyoto University, Osaka University, Tokyo Metropolitan University, Waseda University, University of Rochester, University of Tokyo, and the meetings of Japan Public Choice Society at Yokohama City University (2005), Japanese Economic Association at Chuo University (2005), the Society for Social Choice and Welfare at Istanbul (2006), and Keio Conference on Environmental Economics (2007).
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Sakai, T. Fair waste pricing: an axiomatic analysis to the NIMBY problem. Econ Theory 50, 499–521 (2012). https://doi.org/10.1007/s00199-010-0562-x
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DOI: https://doi.org/10.1007/s00199-010-0562-x
Keywords
- NIMBY (Not in my backyard)
- Market design
- Nearly robustness to strategic manipulation
- Proportional rule
- Manipulation game
- Core