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Sharing a river among satiable agents

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  • Ambec, Stefan
  • Ehlers, Lars

Abstract

We consider the problem of efficiently sharing water from a river among a group of satiable agents. Since each agent's benefit function exhibits a satiation point, the environment can be described as a cooperative game with externalities. We show that the downstream incremental distribution is the unique distribution which both is fair according to the "aspiration welfare" principle and satisfies the non-cooperative core lower bounds. On the other hand, the cooperative core may be empty. Furthermore, the downstream incremental distribution satisfies all core lower bounds for all connected coalitions if and only if each agent's individual rationality constraint is independent of the behavior of the other agents.

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Bibliographic Info

Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 64 (2008)
Issue (Month): 1 (September)
Pages: 35-50

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Handle: RePEc:eee:gamebe:v:64:y:2008:i:1:p:35-50

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Web page: http://www.elsevier.com/locate/inca/622836

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Keywords: Water allocation Externalities Core solutions Fairness;

References

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  1. Carlo Carraro & Carmen Marchiori & Alessandra Sgobbi, 2006. "Applications of negotiation theory to water issues," Working Papers 2006_09Classification-JEL, Department of Economics, University of Venice "Ca' Foscari".
  2. Carraro, Carlo & Siniscalco, Domenico, 1991. "Strategies for the International Protection of the Environment," CEPR Discussion Papers 568, C.E.P.R. Discussion Papers.
  3. Gabrielle Demange, 2004. "On Group Stability in Hierarchies and Networks," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 754-778, August.
  4. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-64, July.
  5. Ambec, S. & Sprumont, Y., 2000. "Sharing a River," Papers 00-06, Laval - Recherche en Energie.
  6. Young, Robert A. & Haveman, Robert H., 1985. "Economics of water resources: a survey," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 2, chapter 11, pages 465-529 Elsevier.
  7. D. Kilgour & Ariel Dinar, 2001. "Flexible Water Sharing within an International River Basin," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 18(1), pages 43-60, January.
  8. Ni, Debing & Wang, Yuntong, 2007. "Sharing a polluted river," Games and Economic Behavior, Elsevier, vol. 60(1), pages 176-186, July.
  9. Chander, Parkash & Tulkens, Henry, 1994. "The Core of an Economy With Multilateral Environmental Externalities," Working Papers 886, California Institute of Technology, Division of the Humanities and Social Sciences.
  10. Macho-Stadler, Ines & Perez-Castrillo, David & Wettstein, David, 2007. "Sharing the surplus: An extension of the Shapley value for environments with externalities," Journal of Economic Theory, Elsevier, vol. 135(1), pages 339-356, July.
  11. Geoffroy de Clippel & Roberto Serrano, 2008. "Marginal Contributions and Externalities in the Value," Econometrica, Econometric Society, vol. 76(6), pages 1413-1436, November.
  12. Moulin, H., 1989. "Uniform Externalities: Two Axioms For Fair Allocation," UFAE and IAE Working Papers 117-89, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  13. Greenberg, Joseph & Weber, Shlomo, 1986. "Strong tiebout equilibrium under restricted preferences domain," Journal of Economic Theory, Elsevier, vol. 38(1), pages 101-117, February.
  14. de Janvry, Alain & Sadoulet, Elisabeth & Winters, Paul C. & Murgai, Rinku, 2000. "Localized and Incomplete Mutual Insurance," Working Papers 12905, University of New England, School of Economics.
  15. Navarro, Noemi, 2007. "Fair allocation in networks with externalities," Games and Economic Behavior, Elsevier, vol. 58(2), pages 354-364, February.
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Citations

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Cited by:
  1. Dinar, Ariel & Blankespoor, Brian & Dinar, Shlomi & Kurukulasuriya, Pradeep, 2010. "Does precipitation and runoff variability affect treaty cooperation between states sharing international bilateral rivers?," Ecological Economics, Elsevier, vol. 69(12), pages 2568-2581, October.
  2. Ansink, Erik & Houba, Harold, 2012. "Market power in water markets," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 237-252.
  3. Ambec, Stefan & Dinar, Ariel & McKinney, Daene, 2011. "Fixed Water Sharing Agreements Sustainable to Drought," IDEI Working Papers 695, Institut d'Économie Industrielle (IDEI), Toulouse.
  4. Wang, Yuntong, 2011. "Trading water along a river," Mathematical Social Sciences, Elsevier, vol. 61(2), pages 124-130, March.
  5. van den Brink, René & van der Laan, Gerard & Moes, Nigel, 2012. "Fair agreements for sharing international rivers with multiple springs and externalities," Journal of Environmental Economics and Management, Elsevier, vol. 63(3), pages 388-403.
  6. Ambec, Stefan & Dinar, Ariel & McKinney, Daene, 2013. "Water sharing agreements sustainable to reduced flows," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 639-655.

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