Reconsider the problem of allocating costs to neighboring communities for implementation...

Reconsider the problem of allocating costs to neighboring communities for implementation for a shared three-party-combined recycling program (presented as Example3- 6). Consider how the optimal cost allocation strategy of million, $0.95 million, and million night he different if the cost of a cooperative facility between City B and City C were lower. Would a three-way partnership be the optimal solution to this problem regardless of the MI of this two-city coalition?

Reference: Example 3.6:

A Recycling Program Shared by Neighboring Communities:

Three communities, A, B, and C, that are not too distant from one another are individually considering recycling programs/projects, Thoughtful citizens in the three communities have suggested that cost savings might result if the towns cooperate in a joint project to be located somewhere between the three. Others have suggested that some pair of towns may be suited to cooperate, but not all three. The towns have a tradition of independence that suggests that cooperation may not be in the cards, even if some coalition appears cost-effective in that it provides savings to the joint participants .least excuse could sink a cooperative project because of the tradition the towns have of going it alone. The planning boards of each of the towns have voted jointly to engage an engineering consultant to evaluate and compare five alternatives. These five alternatives, shown in Figure 3.7, are

1. A, B, and C operating independently of one another, each with their own recycling project;

2. A and B cooperating in a joint effort called AB while C acts alone;

3. B and C cooperating in a joint effort called BC, while A acts alone;

4. A and C cooperating in a joint effort called AC, while B acts alone; and

5. A, B, and C cooperating in a unified project, called ABC