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The Economics of Commonly Owned Groundwater When User Demand Is Perfectly Inelastic


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  • Wang, Chenggang
  • Segarra, Eduardo


This paper provides a theoretical analysis of the common-pool resource dilemma in extracting nonrenewable groundwater resources when water demand is perfectly inelastic. It complements the existing theory of groundwater use, which assumes away the possibility of demand perfect inelasticity. Under perfectly inelastic water demand, the common-pool resource dilemma is by-passed if groundwater users are equally productive in water use. If they are not, a new type of inefficiency can arise due to the lack of a rationing mechanism on the basis of productivity. Our analysis suggests that groundwater management research should pay more attention to water demand elasticity and productivity heterogeneity.

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Bibliographic Info

Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 36 (2011)
Issue (Month): 1 (April)

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Handle: RePEc:ags:jlaare:105533

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Keywords: common-pool resources; groundwater extraction; groundwater management; groundwater use; irrigation water demand; optimal control; pumping externality; water demand elasticity; Resource /Energy Economics and Policy;


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  1. Marita Laukkanen & Phoebe Koundouri, . "Competition versus coopertion in groundwater extraction: A stochastic framework with heteregoneous agents," DEOS Working Papers 0606, Athens University of Economics and Business.
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Cited by:
  1. Perry, Gregory M., 2012. "WAEA Presidential Address Deciding Where to Publish: Some Observations on Journal Impact Factor and Article Influence Score," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(3), December.
  2. Peterson, Jeffrey M. & Saak, Alexander E., 2013. "Spatial externalities in aquifers with varying thickness: Theory and numerical results for the Ogallala aquifer," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150553, Agricultural and Applied Economics Association.
  3. Hendricks, Nathan P. & Peterson, Jeffrey M., 2012. "Fixed Effects Estimation of the Intensive and Extensive Margins of Irrigation Water Demand," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(1), April.
  4. Du Bois, Rodrigo Salcedo & Macias, Miguel Angel Gutierrez, 2013. "Cooperation makes it happen? Groundwater management in Aguascalientes, Mexico: An experimental approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151139, Agricultural and Applied Economics Association.
  5. repec:ags:jrapmc:122312 is not listed on IDEAS
  6. Ashwell, Nicolas E. Quintana & Peterson, Jeffrey M., 2013. "The Impact of Irrigation Capital Subsidies on Common-pool Groundwater Use and Depletion: Results for Western Kansas," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150703, Agricultural and Applied Economics Association.


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