Independence Axioms for Water Allocation
AbstractWe consider the problem of sharing water among agents located along a river. Each agent has quasi-linear preferences over river water and money, where the benefit of consuming an amount of water is given by a continuous and concave benefit function. A solution to the problem efficiently distributes the river water over the agents and wastes no money. We introduce a number of (independence) axioms to characterize two new and two existing solutions. We apply the solutions to the particular case that every agent has constant marginal benefit of one up to a satiation point and marginal benefit of zero thereafter. In this case we find that two of the solutions (one existing and one new) can be implemented without monetary transfers between the agents.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 11-128/1.
Date of creation: 09 Sep 2011
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Water allocation; Harmon doctrine; concave benefit function; stability; externality; independence axiom; water claim;
Find related papers by JEL classification:
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
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