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Sharing a River

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Author Info

  • Ambec, S.
  • Sprumont, Y.

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

Paper provided by Laval - Recherche en Energie in its series Papers with number 00-06.

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Length: 27 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:fth:lavaen:00-06

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Postal: UNIVERSITE LAVAL, GREEN, DEPARTEMENT D'ECONOMIQUE, QUEBEC G1K 7P4.
Phone: (418) 656-2096
Fax: (418) 656-7412
Web page: http://www.green.ecn.ulaval.ca/
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Related research

Keywords: NATURAL RESOURCES ; RESOURCE ALLOCATION;

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References

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  1. 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.
  2. Dutta, Bhaskar & Ray, Debraj, 1989. "A Concept of Egalitarianism under Participation Constraints," Econometrica, Econometric Society, vol. 57(3), pages 615-35, May.
  3. 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.
  4. Dinar, Ariel & Rosegrant, Mark W. & Meinzen-Dick, Ruth, 1997. "Water allocation mechanisms : principles and examples," Policy Research Working Paper Series 1779, The World Bank.
  5. Greenberg, Joseph & Weber, Shlomo, 1986. "Strong tiebout equilibrium under restricted preferences domain," Journal of Economic Theory, Elsevier, vol. 38(1), pages 101-117, February.
  6. 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).
  7. Champsaur, Paul & Laroque, Guy, 1981. "Fair allocations in large economies," Journal of Economic Theory, Elsevier, vol. 25(2), pages 269-282, October.
  8. 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.
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