The Design of ``Smart'' Water Market Institutions Using Laboratory Experiments
One of the problems with proposals for substantialinstitutional change in water systems is thatmodification and irreversibility make the processslow, cautious and costly to society. In this paper,we discuss the role that experimental economics canplay in evaluating proposed institutional changes tohelp facilitate a more rapid and smooth adoption ofchanges in the water system. Experimental economicsyields a formal and replicable system for analyzingalternative market structures before they are actuallyimplemented. For example, a water market can bedeveloped and tested in the laboratory under supplyand demand constraints that reflect drought conditionsthat might occur in California, or other arid regionsin the world. We present a prototype of a Californiawater transfer model and the results from a series ofwater market experiments. Results include realizedmarket efficiency and surplus distribution, as well asan analysis of market price volatility. Theimplications of this research extend well beyondCalifornia water markets, not only to water markets inother arid regions, but also to the design of marketsfor other environmental goods, including tradablepollution permits and fishery ITQs. Copyright Kluwer Academic Publishers 2000
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 17 (2000)
Issue (Month): 4 (December)
|Contact details of provider:|| Web page: http://www.springerlink.com/link.asp?id=100263|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Plott, Charles R., . "Dimensions of Parallelism: Some Policy Applications of Experimental Methods," Working Papers 569, California Institute of Technology, Division of the Humanities and Social Sciences.
- McCabe, Kevin A. & Rassenti, Stephen J. & Smith, Vernon L., 1989. "Designing `smart' computer-assisted markets : An experimental auction for gas networks," European Journal of Political Economy, Elsevier, vol. 5(2-3), pages 259-283.
- Rassenti, Stephen J & Reynolds, Stanley S & Smith, Vernon L, 1994. "Cotenancy and Competition in an Experimental Auction Market for Natural Gas Pipeline Networks," Economic Theory, Springer, vol. 4(1), pages 41-65, January.
- Smith, Vernon L, 1982. "Microeconomic Systems as an Experimental Science," American Economic Review, American Economic Association, vol. 72(5), pages 923-55, December.
- Vernon L. Smith, 1980. "Relevance of Laboratory Experiments to Testing Resource Allocation Theory," NBER Chapters, in: Evaluation of Econometric Models, pages 345-377 National Bureau of Economic Research, Inc.
- repec:nbr:nberbk:kmen80-1 is not listed on IDEAS
- Richard E. Howitt, 1995. "A Calibration Method For Agricultural Economic Production Models," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(2), pages 147-159.
When requesting a correction, please mention this item's handle: RePEc:kap:enreec:v:17:y:2000:i:4:p:375-394. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.