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Transboundary Externalities and Property Rights: An International River Pollution Model

Author

Listed:
  • Gerard van der Laan

    (VU University Amsterdam)

  • Nigel Moes

    (VU University Amsterdam)

Abstract

In this paper we study international river pollution problems. We introduce a model in which the agents (countries) located along a river derive benefit while causing pollution, but also incur environmental costs of experiencing pollution from all upstream agents. We find that total pollution in the model decreases when the agents decide to cooperate. The resulting gain in social welfare can be distributed among the agents based on the property rights over the river. Using principles from international water law we suggest 'fair' ways of distributing the property rights and therefore the cooperative gain.

Suggested Citation

  • 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.
    • Handle: RePEc:tin:wpaper:20120006
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    References listed on IDEAS

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    Cited by:

    1. Houba, Harold & van der Laan, Gerard & Zeng, Yuyu, 2014. "Asymmetric Nash Solutions in the River Sharing Problem," Strategic Behavior and the Environment, now publishers, vol. 4(4), pages 321-360, December.
    2. Jorge Alcalde-Unzu & Maria Gomez-Rua & Elena Molis, 2018. "Allocating the costs of cleaning a river; estimating responsibilities versus incentive compatibility," ThE Papers 18/02, Department of Economic Theory and Economic History of the University of Granada..
    3. Jorge Alcalde-Unzu & María Gómez-Rúa & Elena Molis, 2021. "Allocating the costs of cleaning a river: expected responsibility versus median responsibility," International Journal of Game Theory, Springer;Game Theory Society, vol. 50(1), pages 185-214, March.
    4. He, Jie & Huang, Anping & Xu, Luodan, 2015. "Spatial heterogeneity and transboundary pollution: A contingent valuation (CV) study on the Xijiang River drainage basin in south China," China Economic Review, Elsevier, vol. 36(C), pages 101-130.
    5. Alcalde-Unzu, Jorge & Gómez-Rúa, María & Molis, Elena, 2015. "Sharing the costs of cleaning a river: the Upstream Responsibility rule," Games and Economic Behavior, Elsevier, vol. 90(C), pages 134-150.

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    More about this item

    Keywords

    international river; pollution; externality; property rights; value;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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