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Sharing a river among satiable agents

  • Ambec, Stefan
  • Ehlers, Lars

We consider the problem of efficiently sharing water from a river among a group of satiable agents. Since each agent's benefit function exhibits a satiation point, the environment can be described as a cooperative game with externalities. We show that the downstream incremental distribution is the unique distribution which both is fair according to the "aspiration welfare" principle and satisfies the non-cooperative core lower bounds. On the other hand, the cooperative core may be empty. Furthermore, the downstream incremental distribution satisfies all core lower bounds for all connected coalitions if and only if each agent's individual rationality constraint is independent of the behavior of the other agents.

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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 64 (2008)
Issue (Month): 1 (September)
Pages: 35-50

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Handle: RePEc:eee:gamebe:v:64:y:2008:i:1:p:35-50
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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  1. 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.
  2. Ambec, S. & Sprumont, Y., 2000. "Sharing a River," Papers 00-06, Laval - Recherche en Energie.
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  8. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-64, July.
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  11. Carraro, Carlo & Siniscalco, Domenico, 1991. "Strategies for the International Protection of the Environment," CEPR Discussion Papers 568, C.E.P.R. Discussion Papers.
  12. Gabrielle Demange, 2004. "On Group Stability in Hierarchies and Networks," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 754-778, August.
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