Trading water along a river
A set of agents is located along a river. Each agent consumes certain amount of water he receives from his part of the river basin and may sell certain amount to his downstream agent if it is mutually beneficial. Water trading is restricted to two neighboring agents and an agent can only pass water to his downstream agent. We ask if this restricted trade to neighboring agents can implement an efficient allocation of water. We show that the efficient allocation of water can be achieved through the process of downstream bilateral trading. Specifically, we show that this one way "downstream" trading process implements the unique efficient allocation as well as a welfare distribution. We also show that the welfare distribution is in the core of the associated game of the problem. Moreover, we show that the coalition of agents upstream any agent obtains more welfare with the bilateral trading than with the downstream incremental distribution proposed by Ambec and Sprumont (2002) and less than with the upstream incremental distribution proposed by (Ambec and Ehlers, 2008a) and (Ambec and Ehlers, 2008b).
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- Ambec, Stefan & Ehlers, Lars, 2008. "Sharing a river among satiable agents," Games and Economic Behavior, Elsevier, vol. 64(1), pages 35-50, September.
- Ambec, Stefan & Sprumont, Yves, 2000.
"Sharing a River,"
Cahiers de recherche
- Ambec, S. & Sprumont, Y., 2000. "Sharing a River," Papers 00-06, Laval - Recherche en Energie.
- AMBEC, Steve & SPRUMONT, Yves, 2000. "Sharing a River," Cahiers de recherche 2000-08, Universite de Montreal, Departement de sciences economiques.
- Ambec, S. & Sprumont, Y., 2000. "Sharing a River," Cahiers de recherche 2000-08, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Murgai, Rinku & Winters, Paul & Sadoulet, Elisabeth & Janvry, Alain de, 2002.
"Localized and incomplete mutual insurance,"
Journal of Development Economics,
Elsevier, vol. 67(2), pages 245-274, April.
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- Giannias, Dimitrios A. & Lekakis, Joseph N., 1997. "Policy analysis for an amicable, efficient and sustainable inter-country fresh water resource allocation," Ecological Economics, Elsevier, vol. 21(3), pages 231-242, June.
- D. Kilgour & Ariel Dinar, 2001. "Flexible Water Sharing within an International River Basin," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 18(1), pages 43-60, January.
- Greenberg, Joseph & Weber, Shlomo, 1986. "Strong tiebout equilibrium under restricted preferences domain," Journal of Economic Theory, Elsevier, vol. 38(1), pages 101-117, February.
- Barret, Scott & DEC, 1994. "Conflict and cooperation in managing international water resources," Policy Research Working Paper Series 1303, The World Bank.
- Stefan Ambec, 2008. "Sharing a resource with concave benefits," Social Choice and Welfare, Springer, vol. 31(1), pages 1-13, June.
- Ambec, S. & Ehlers, L., 2007. "Cooperation and equity in the river sharing problem," Working Papers 200705, Grenoble Applied Economics Laboratory (GAEL).
- Weber, Marian L., 2001. "Markets for Water Rights under Environmental Constraints," Journal of Environmental Economics and Management, Elsevier, vol. 42(1), pages 53-64, July.
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