Sharing Water from many Rivers
AbstractThis paper studies the problem of non-cooperative water allocation between heterogeneous communities embodied in an acyclic network of water sources. The extraction activity of a community has a negative impact on the extraction activity of its direct successors: it reduces the intensity of water flows entering their source, and thus, increase their convex costs of water extraction. We show that the equilibrium profile is unique and may be expressed through complementarity and substitutability effects which sharacterize the incoming centrality of a community in the network of sources. For each community, the efficient activity is a combination of two opposite network effects, the incoming centrality and the outcoming centrality. Then, the optimal tax rate imposed to a community depends on the network structure, and reflects both the marginal damages and the marginal benefits this community delivers to other communities at the efficient extraction activity profile.
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Bibliographic InfoPaper provided by HAL in its series Working Papers with number hal-00678997.
Date of creation: 14 Mar 2012
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flowing water ; network of sources ; equilibrium effects; efficiency effects ; optimal tax;
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- Yann Rébillé & Lionel Richefort, 2014. "Influence and Social Tragedy in Networks," Working Papers hal-00924017, HAL.
- Jorge Alcalde-Unzu & Maria Gomez-Rua & Elena Molis, 2013.
"Sharing the costs of cleaning a river: the Upstream Responsibility rule,"
13/03, Department of Economic Theory and Economic History of the University of Granada..
- Jorge Alcalde-Unzu & María Gómez-Rúa & Elena Molis, 2013. "Sharing the costs of cleaning a river: the Upstream Responsibility rule," Documentos de Trabajo - Lan Gaiak Departamento de EconomÃa - Universidad PÃºblica de Navarra 1301, Departamento de Economía - Universidad Pública de Navarra.
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