A Game-theoretic Approach to Cost Allocation for Infrastructure Arrangement in An Urban Renewal Project

The public sector and landowners, including private entities, need to cooperate in urban renewal projects to develop the infrastructure. It is important to allocate fairly the joint costs to each agent. In this paper we present a discussion on the rationality of the cost allocation of infrastructure arrangement among landowners and the public sector in the urban renewal project. A mathematical model based on cooperative game theory is formulated and then applied to an assumed three-player situation. We show that the model well explains an appropriate way of allocating costs, and also extra cooperative benefits