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Sharing a River

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  • Ambec, Stefan
  • Sprumont, Yves

Abstract

A group of agents located along a river have quasi-linear preferences over water and money. We ask how the water should be allocated and what money transfers should be performed. We are interested in efficiency, stability (in the sense of the core), and fairness (in a sense to be defined). We first show that the cooperative game associated with that problem is convex: its core is therefore large and easily described. Next, we propose the following fairness requirement: no group of agents should enjoy a welfare higher than what it could achieve in the absence of the remaining agents. We prove that only one welfare distribution in the core satisfies this condition: its marginal contribution vector corresponding to the ordering of the agents along the river. We discuss how it could be decentralized or implemented.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 107 (2002)
Issue (Month): 2 (December)
Pages: 453-462

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Handle: RePEc:eee:jetheo:v:107:y:2002:i:2:p:453-462

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Web page: http://www.elsevier.com/locate/inca/622869

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References

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  1. Dinar, Ariel & Rosegrant, Mark W. & Meinzen-Dick, Ruth, 1997. "Water allocation mechanisms : principles and examples," Policy Research Working Paper Series 1779, The World Bank.
  2. 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.
  3. Dutta, Bhaskar & Ray, Debraj, 1989. "A Concept of Egalitarianism under Participation Constraints," Econometrica, Econometric Society, vol. 57(3), pages 615-35, May.
  4. Kilgour, D. Marc & Dinar, Ariel, 1995. "Are stable agreements for sharing international river waters now possible?," Policy Research Working Paper Series 1474, The World Bank.
  5. Moulin, Herve, 1990. "Uniform externalities : Two axioms for fair allocation," Journal of Public Economics, Elsevier, vol. 43(3), pages 305-326, December.
  6. Greenberg, Joseph & Weber, Shlomo, 1986. "Strong tiebout equilibrium under restricted preferences domain," Journal of Economic Theory, Elsevier, vol. 38(1), pages 101-117, February.
  7. Moulin, Herve, 1990. "Joint Ownership of a Convex Technology: Comparison of Three Solutions," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 439-52, July.
  8. Champsaur, Paul & Laroque, Guy, 1981. "Fair allocations in large economies," Journal of Economic Theory, Elsevier, vol. 25(2), pages 269-282, October.
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Citations

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Cited by:
  1. C. Robert Clark & Andrew Leach, 2005. "La réglementation de l’énergie au Québec," CIRANO Burgundy Reports 2005rb-04, CIRANO.
  2. Antoine Soubeyran & Agnes Tomini, 2012. "Water Shortages and Conflict," Revue d'économie politique, Dalloz, vol. 122(2), pages 279-297.
  3. Erik Ansink & Harold Houba, 2010. "Market Power in Water Markets," Tinbergen Institute Discussion Papers 10-054/1, Tinbergen Institute, revised 16 May 2011.
  4. Herings, P. Jean-Jacques & van der Laan, Gerard & Talman, Dolf, 2007. "The socially stable core in structured transferable utility games," Games and Economic Behavior, Elsevier, vol. 59(1), pages 85-104, April.
  5. Wang, Yuntong, 2011. "Trading water along a river," Mathematical Social Sciences, Elsevier, vol. 61(2), pages 124-130, March.
  6. René van den Brink, 2003. "Axiomatizations of Permission Values for Games with a Hierarchical Permission Structure using Split Neutrality," Tinbergen Institute Discussion Papers 03-100/1, Tinbergen Institute.
  7. Michel Grabisch & Lijue Xie, 2011. "The restricted core of games on distributive lattices: how to share benefits in a hierarchy," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00583868, HAL.
  8. Labreuche, Christophe, 2011. "Interaction indices for games on combinatorial structures with forbidden coalitions," European Journal of Operational Research, Elsevier, vol. 214(1), pages 99-108, October.
  9. Ambec, Stefan & Ehlers, Lars, 2008. "Sharing a river among satiable agents," Games and Economic Behavior, Elsevier, vol. 64(1), pages 35-50, September.
  10. d'Albis, Hippolyte & Ambec, Stefan, 2010. "Fair intergenerational sharing of a natural resource," Mathematical Social Sciences, Elsevier, vol. 59(2), pages 170-183, March.
  11. Lars Gårn Hansen & Frank Jensen & Eirik S. Amundsen, 2011. "Regulating groundwater use in developing countries: a feasible instrument for public intervention," IFRO Working Paper 2011/3, University of Copenhagen, Department of Food and Resource Economics.
  12. C. Robert Clark & Andrew Leach, 2005. "Energy Regulation in Quebec," CIRANO Burgundy Reports 2005rb-03, CIRANO.
  13. Harold Houba, . "Computing Alternating Offers and Water Prices in Bilateral River Basin Management," Tinbergen Institute Discussion Papers 06-095/1, Tinbergen Institute.
  14. 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.
  15. Ni, Debing & Wang, Yuntong, 2007. "Sharing a polluted river," Games and Economic Behavior, Elsevier, vol. 60(1), pages 176-186, July.

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