Welfare Maximisation in Stable Sharing Services

We propose a model of sharing of public services among local governments. Our model is an application of Nicolo et al. (2023) and combines features of two models: assignment games (Shapley and Shubik (1971)) and the division problem (Sprumont (1991)). We provide an algorithm (The Simple SAM) that generates a stable allocation that maximises the utilitarian welfare. We then discuss the incen- tive compatibility of the solution proposed and the relation with welfare functions different from the utilitarian one