Linear Production Games with Non-transferable Utilities

We introduce non-transferable utility linear production (NTU LP) games, a non-transferable utility analogue of classical linear production games, as a framework for the study of cooperative behavior in the production or establishment of public goods with pooled resources.

NTU LP games combine the game-theoretic tensions inherent in public decision-making with the modeling flexibility of linear programming.

We derive structural properties regarding the non-emptiness, representability and complexity of the core, a solution concept that models the viability of cooperation.

In particular, we provide fairly general sufficient conditions under which the core of an NTU LP game is guaranteed to be non-empty, prove that determining membership in the core is co-NP-complete, and develop a cutting plane algorithm to optimize various social welfare objectives subject to core membership.

We apply these results in a data-driven case study on service plan optimization for the Chicago bus system.

As our study illustrates, cooperation is necessary for the successful deployment of transportation service plans and similar public goods, but it may also have adverse or counterintuitive distributive implications.