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A Stochastic Multiple Players Multi-Issues Bargaining Model for the Piave River Basin

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Author Info
Sgobbi, Alessandra / Carraro, Carlo

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Abstract

The objective of this paper is to investigate the usefulness of non-cooperative bargaining theory for the analysis of negotiations on water allocation and management. We explore the impacts of different economic incentives, a stochastic environment and varying individual preferences on players’ strategies and equilibrium outcomes through numerical simulations of a multilateral, multiple issues, non-cooperative bargaining model of water allocation in the Piave River Basin, in the North East of Italy. Players negotiate in an alternating-offer manner over the sharing of water resources (quantity and quality). Exogenous uncertainty over the size of the negotiated amount of water is introduced to capture the fact that water availability is not known with certainty to negotiating players. We construct the players’ objective function with their direct input. We then test the applicability of our multiple players, multi-issues, stochastic framework to a specific water allocation problem and conduct comparative static analyses to assess sources of bargaining power. Finally, we explore the implications of different attitudes and beliefs over water availability.

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Paper provided by CESifo GmbH in its series CESifo Working Paper Series with number CESifo Working Paper No. 2178.

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Date of creation: 2007
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Handle: RePEc:ces:ceswps:_2178

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Keywords: bargaining non-cooperative game theory simulation models uncertainty

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References listed on IDEAS
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  1. Henk Folmer & Pierre Mouche & Shannon Ragland, 1993. "Interconnected games and international environmental problems," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 3(4), pages 313-335, August. [Downloadable!] (restricted)
  2. Tsur, Yacov & Graham-Tomasi, Theodore, 1991. "The buffer value of groundwater with stochastic surface water supplies," Journal of Environmental Economics and Management, Elsevier, vol. 21(3), pages 201-224, November. [Downloadable!] (restricted)
  3. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January. [Downloadable!] (restricted)
  4. Gordon Rausser & Leo Simon, 1992. "A Noncooperative Model of Collective Decision Making: A Multilateral Bargaining Approach," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series 620, Department of Agricultural & Resource Economics, UC Berkeley. [Downloadable!]
  5. Adams, Gregory & Rausser, Gordon & Simon, Leo, 1996. "Modelling multilateral negotiations: An application to California water policy," Journal of Economic Behavior & Organization, Elsevier, vol. 30(1), pages 97-111, July. [Downloadable!] (restricted)
  6. Carlo Giupponi & R. Camera & A. Fassio & A. Lasut & J. Mysiak & A. Sgobbi, 2006. "Network Analysis, Creative System Modelling and Decision Support: The NetSyMoD Approach," Working Papers 2006.46, Fondazione Eni Enrico Mattei. [Downloadable!]
  7. Carraro, Carlo & Marchiori, Carmen & Sgobbi, Alessandra, 2007. "Negotiating on water: insights from non-cooperative bargaining theory," Environment and Development Economics, Cambridge University Press, vol. 12(02), pages 329-349, March. [Downloadable!]
  8. Sophie Thoyer & Sylvie Morardet & Patrick Rio & Leo Simon & Rachel Goodhue & Gordon Rausser, 2001. "A Bargaining Model to Simulate Negotiations Between Water Users," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 4. [Downloadable!]
  9. Manzini, Paola & Mariotti, Marco, 2002. "The Effect of Disagreement on Noncooperative Bargaining," Journal of Economic Theory, Elsevier, vol. 107(2), pages 490-499, December. [Downloadable!] (restricted)
  10. Tsur Yacov & Zemel Amos, 1995. "Uncertainty and Irreversibility in Groundwater Resource Management," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 149-161, September. [Downloadable!] (restricted)
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