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A stochastic multiple players multi-issues bargaining model for the Piave river basin

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  • Carlo Carraro

    ()
    (Department of Economics, University Of Venice Cà Foscari, Fondazione Eni Enrico Mattei, CEPR, CEPS and CMCC)

  • Alessandra Sgobbi

    (Fondazione Eni Enrico Mattei and CMCC)

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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Bibliographic Info

Paper provided by Department of Economics, University of Venice "Ca' Foscari" in its series Working Papers with number 2007_28.

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Length: 33
Date of creation: 2007
Date of revision:
Handle: RePEc:ven:wpaper:2007_28

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Keywords: Bargaining; non-cooperative game theory; simulation models; uncertainty;

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References

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  1. Werner Güth & M. Vittoria Levati & Boris Maciejovsky, 2005. "Deadline Effects In Sequential Bargaining — An Experimental Study," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 117-135.
  2. Fehr, Ernst & Schmidt, Klaus M., 1998. "A Theory of Fairness, Competition and Cooperation," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1812, C.E.P.R. Discussion Papers.
  3. Carraro, Carlo & Marchiori, Carmen & Sgobbi, Alessandra, 2007. "Negotiating on water: insights from non-cooperative bargaining theory," Environment and Development Economics, Cambridge University Press, Cambridge University Press, vol. 12(02), pages 329-349, April.
  4. Rausser, Gordon C. & Simon, L., 1990. "Noncooperative Model of Collective Decision Making: A Multilateral Bargaining Approach," Staff General Research Papers, Iowa State University, Department of Economics 819, Iowa State University, Department of Economics.
  5. Sophie Thoyer & Sylvie Morardet & Patrick Rio & Leo Simon & Rachael 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, Journal of Artificial Societies and Social Simulation, vol. 4(2), pages 6.
  6. Manzini, Paola & Mariotti, Marco, 2002. "The Effect of Disagreement on Noncooperative Bargaining," Journal of Economic Theory, Elsevier, Elsevier, vol. 107(2), pages 490-499, December.
  7. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, Econometric Society, vol. 50(1), pages 97-109, January.
  8. Adams, Gregory & Rausser, Gordon & Simon, Leo, 1996. "Modelling multilateral negotiations: An application to California water policy," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 30(1), pages 97-111, July.
  9. 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.
  10. Simon, Leo K. & Goodhue, Rachael E. & Rausser, Gordon C. & Thoyer, Sophie & Morardet, Sylvie & Rio, Patrick, 2007. "Structure and Power in Multilateral Negotiations: An Application to French Water Policy," Monographs, University of California, Davis, Giannini Foundation, University of California, Davis, Giannini Foundation, number 37630.
  11. Henk Folmer & Pierre Mouche & Shannon Ragland, 1993. "Interconnected games and international environmental problems," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 3(4), pages 313-335, August.
  12. 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.
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Cited by:
  1. Henry Penikas & Yulia Titova, 2012. "Modeling Policy Response to Global Systemically Important Banks Regulation," HSE Working papers, National Research University Higher School of Economics WP BRP 02/FE/2012, National Research University Higher School of Economics.
  2. Carmen Marchiori, 2010. "Concern for Fairness and Incentives in Water Negotiations," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 45(4), pages 553-571, April.

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