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Trading water along a river

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  • Wang, Yuntong

Abstract

A set of agents is located along a river. Each agent consumes certain amount of water he receives from his part of the river basin and may sell certain amount to his downstream agent if it is mutually beneficial. Water trading is restricted to two neighboring agents and an agent can only pass water to his downstream agent. We ask if this restricted trade to neighboring agents can implement an efficient allocation of water. We show that the efficient allocation of water can be achieved through the process of downstream bilateral trading. Specifically, we show that this one way "downstream" trading process implements the unique efficient allocation as well as a welfare distribution. We also show that the welfare distribution is in the core of the associated game of the problem. Moreover, we show that the coalition of agents upstream any agent obtains more welfare with the bilateral trading than with the downstream incremental distribution proposed by Ambec and Sprumont (2002) and less than with the upstream incremental distribution proposed by (Ambec and Ehlers, 2008a) and (Ambec and Ehlers, 2008b).

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Bibliographic Info

Article provided by Elsevier in its journal Mathematical Social Sciences.

Volume (Year): 61 (2011)
Issue (Month): 2 (March)
Pages: 124-130

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Handle: RePEc:eee:matsoc:v:61:y:2011:i:2:p:124-130

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Web page: http://www.elsevier.com/locate/inca/505565

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Keywords: Efficient allocation of water Water trading Core;

References

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  1. Ambec, Stefan & Ehlers, Lars, 2008. "Sharing a river among satiable agents," Games and Economic Behavior, Elsevier, vol. 64(1), pages 35-50, September.
  2. Ambec, S. & Ehlers, L., 2007. "Cooperation and equity in the river sharing problem," Working Papers 200705, Grenoble Applied Economics Laboratory (GAEL).
  3. Barret, Scott & DEC, 1994. "Conflict and cooperation in managing international water resources," Policy Research Working Paper Series 1303, The World Bank.
  4. Greenberg, Joseph & Weber, Shlomo, 1986. "Strong tiebout equilibrium under restricted preferences domain," Journal of Economic Theory, Elsevier, vol. 38(1), pages 101-117, February.
  5. Ambec, S. & Sprumont, Y., 2000. "Sharing a River," Papers 00-06, Laval - Recherche en Energie.
  6. Dinar, Ariel & Wolf, Aaron, 1994. "International Markets for Water and the Potential for Regional Cooperation: Economic and Political Perspectives in the Western Middle East," Economic Development and Cultural Change, University of Chicago Press, vol. 43(1), pages 43-66, October.
  7. 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.
  8. Weber, Marian L., 2001. "Markets for Water Rights under Environmental Constraints," Journal of Environmental Economics and Management, Elsevier, vol. 42(1), pages 53-64, July.
  9. 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.
  10. Giannias, Dimitrios A. & Lekakis, Joseph N., 1997. "Policy analysis for an amicable, efficient and sustainable inter-country fresh water resource allocation," Ecological Economics, Elsevier, vol. 21(3), pages 231-242, June.
  11. Stefan Ambec, 2008. "Sharing a resource with concave benefits," Social Choice and Welfare, Springer, vol. 31(1), pages 1-13, June.
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Citations

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Cited by:
  1. Ambec, Stefan & Dinar, Ariel & McKinney, Daene, 2011. "Fixed Water Sharing Agreements Sustainable to Drought," LERNA Working Papers 11.19.353, LERNA, University of Toulouse.
  2. Li, Y.P. & Liu, J. & Huang, G.H., 2014. "A hybrid fuzzy-stochastic programming method for water trading within an agricultural system," Agricultural Systems, Elsevier, vol. 123(C), pages 71-83.
  3. Gerard van der Laan & Nigel Moes, 2012. "Transboundary Externalities and Property Rights: An International River Pollution Model," Tinbergen Institute Discussion Papers 12-006/1, Tinbergen Institute.
  4. Dong, Baomin & Ni, Debing & Wang, Yuntong, 2012. "Sharing a polluted river network," MPRA Paper 38839, University Library of Munich, Germany.
  5. René Brink & Arantza Estévez-Fernández & Gerard Laan & Nigel Moes, 2014. "Independence of downstream and upstream benefits in river water allocation problems," Social Choice and Welfare, Springer, vol. 43(1), pages 173-194, June.
  6. Jorge Alcalde-Unzu & Maria Gomez-Rua & Elena Molis, 2013. "Sharing the costs of cleaning a river: the Upstream Responsibility rule," ThE Papers 13/03, Department of Economic Theory and Economic History of the University of Granada..
  7. Gerard van der Laan & Nigel Moes, 2012. "Transboundary Externalities and Property Rights: An International River Pollution Model," Tinbergen Institute Discussion Papers 12-006/1, Tinbergen Institute.
  8. Hurt, Wesley & Osório, António (António Miguel), 2014. "A Sequential Allocation Problem: The Asymptotic Distribution of Resources," Working Papers 2072/237596, Universitat Rovira i Virgili, Department of Economics.
  9. Sylvain Beal & Amandine Ghintran & Eric Remila & Philippe Solal, 2013. "The River Sharing Problem: A Survey," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 15(03), pages 1340016-1-1.
  10. Erik Ansink & Michael Gengenbach & Hans-Peter Weikard, 2012. "River Sharing and Water Trade," Working Papers 2012.17, Fondazione Eni Enrico Mattei.
  11. 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.
  12. repec:dgr:kubcen:2013078 is not listed on IDEAS
  13. Hurt, Wesley & Osorio, Antonio, 2014. "A Sequential Allocation Problem: The Asymptotic Distribution of Resources," MPRA Paper 56690, University Library of Munich, Germany.
  14. Rémy Delille & Jean-Christophe Pereau, 2014. "The Seawall Bargaining Game," Games, MDPI, Open Access Journal, vol. 5(2), pages 127-139, June.

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