Abstract
We study on the problem of allocation of cost incurred by owners of environmental management systems. We design the cost allocation mechanism using a dynamic cooperative game of joint replacement of the systems. We find that the game is characterized by the instantaneous cost saving function. We suggest that the cost allocation method must satisfy several axioms such as additivity and dummy in this context. As a result, the class of additive cost methods is usuful. Especially, Shapley value is the most useful because it satisfies all axioms and holds the core if the game is convex.
