Cost Sharing in Multiple Use Forestry: A Game Theoretic Approach

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Game theory is applied to the problem of joint cost allocation in forest management. The theory is used to define bounds (limits) to cost allocations. These traditional bounds are further defined in the context of potentially relevant benefit information to arrive at "benefit-included" bounds. These benefit-included bounds are consistent with both game theory and the early water resources principles that were based on cost separability. The traditional bounds and the benefit-included bounds are applied to a multipurpose forestry case study. The application is facilitated using the "nucleolus" cost allocation technique. The nucleolus provides a unique allocation that does not breach the bounds. The previously obscure calculation procedure of the nucleolus is clarified by example. For. Sci. 33(1):81-88.

Keywords: Nucleolus; core theory; cost allocation; joint production

Document Type: Journal Article

Affiliations: Principal Economist, Rocky Mountain Forest and Range Experiment Station, Ft. Collins, CO.

Publication date: March 1, 1987

More about this publication?
  • Forest Science is a peer-reviewed journal publishing fundamental and applied research that explores all aspects of natural and social sciences as they apply to the function and management of the forested ecosystems of the world. Topics include silviculture, forest management, biometrics, economics, entomology & pathology, fire & fuels management, forest ecology, genetics & tree improvement, geospatial technologies, harvesting & utilization, landscape ecology, operations research, forest policy, physiology, recreation, social sciences, soils & hydrology, and wildlife management.
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