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- Title
Public Goods, Common Inputs, and the Efficiency of Full Allocations.
- Authors
Cohen, Susan I.; Loeb, Martin
- Abstract
ABSTRACT: This paper addresses the simultaneous problems of determining input levels in a multidivisional firm and allocating the input costs to the divisions. A distinction analogous to that in economics between pure public goods and pure private goods is made between pure common inputs and pure private inputs. It is shown that for a pure common input, decentralization utilizing a full cost allocation can result in an efficient allocation of the input. Although efficient decentralization is possible in this case, the "free-rider problem" suggests that such an outcome is unlikely. In addition, it is shown that recently suggested allocation schemes based on game-theoretic concepts may not lead to an efficient allocation of pure common inputs.
- Subjects
PUBLIC goods; COST allocation; DECENTRALIZATION in management; COST accounting; COST shifting; ACCOUNTING; PUBLIC finance
- Publication
Accounting Review, 1982, Vol 57, Issue 2, p336
- ISSN
0001-4826
- Publication type
Article