Abstract

During a cultural festival, artists and theaters act as a cartel by agreeing on pricing decisions that maximize the groups’ profit as a whole. We model the problem of sharing the profit created by a festival among organizing theaters as a cooperative game. In such a game, the worth of a coalition is defined as the theaters’ profit from the optimal fixation of prices. We show that this class of games is convex and we axiomatically characterize the Shapley value for this class of games. We also provide an axiomatic basis for the downstream incremental solution. Finally, we apply this model to the NEXT festival, for which we have collected data. We propose an approach to derive the games’ vector from the data and we compute the different solutions.