Cost Allocation: Methods, Principles, Applications

This book provides a theoretical framework for systematically evaluating the "pros" and "cons" of various methods. It also includes a series of case studies in cost allocation to give a sense of the real problems encountered in implementation. Among the examples treated are telecommunications pricing, multipurpose reservoir charges, and airport landing fees. Finally several articles address the broader fairness issues inherent in the pricing of public services. The history of the notion of the "just price" from medieval to modern times is discussed, together with observations on what principles seem to guide decisions in telecommunications rate cases in the United States. The connections between cost allocation, efficiency, and entry in the telecommunications market are also examined in two different contexts: the U.S. and France.
The overall aim of the book is to provide theoretical foundations for using specific methods, to examine the distributional and fairness issues involved in cost allocation, and to give a sense of the practical problems encountered in implementation.
The book will appeal to practitioners interested in what allocation methods are available, and to theorists concerned with their axiomatic foundations.

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