Cost allocation revisited: An optimality result

The resource manager of a firm is faced with capacity and pricing decisions with regard to a congestion-prone system such as computer/communication facilities. Difficulties arise since the manager is uninformed of the system demand when the capacity decision is to be made. A game-theoretic model is developed to analyze the effects of different accounting rules on the elicitation of relevant information and ex-post efficiency in acquisition and allocation decisions. The key result is that the cost allocation method (aided by an anonymous reporting scheme) is indeed, as asserted by Zimmerman, a full-information-efficient rule achieving optimality both in acquisition and allocation decisions. Discussions of the main assumptions underlying this result are provided.