COOPERATIVE INCOME ALLOCATION IN A MULTIOUTPUT, MULTIINPUT SETTING

Joint enterprises usually allocate returns among-member firms in proportion to the value of resources which members have contributed. Unfortunately, market valuations of such resources often are unavailable or poorly represent the resources' contributions to enterprise profitability. The present paper shows hedonic methods can be used to provide a general formulation of a resource's contribution to cooperative or joint income, even when heterogeneous resources are commingled prior to final product sale. The formulation is employed to allocate net returns among enterprise members such that no member subsidizes another.