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International Environmental Agreements for River Sharing Problems

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  • Harold Houba
  • Gerard Laan
  • Yuyu Zeng

Abstract

We study partial coalition formation and the strategic timing of membership of an IEA for environmental issues in the Coalitional Bargaining Game (CBG) of Gomes (Econometrica 73:1329–1350, 2005 ). We apply the CBG to a specific river sharing problem with two symmetric upstream agents, each at a tributary, and one downstream agent located at the junction of tributaries. We identify five regions in the parameter space of a discount factor and a productivity parameter for water. In one region the grand coalition always forms immediately. In two other regions, immediate formation of the grand coalition and gradual coalition formation both occur with positive probability. In another two regions only gradual coalition formation occurs. In one of these latter regions, a region with discount factors close to one, both upstream agents form a monopoly with positive probability. Formation of the monopoly persists in the limit as the discount factor goes to one. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Harold Houba & Gerard Laan & Yuyu Zeng, 2015. "International Environmental Agreements for River Sharing Problems," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 855-872, December.
  • Handle: RePEc:kap:enreec:v:62:y:2015:i:4:p:855-872
    DOI: 10.1007/s10640-014-9862-0
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    Cited by:

    1. Ansink, Erik & Gengenbach, Michael & Weikard, Hans-Peter, 2012. "River Sharing and Water Trade," Climate Change and Sustainable Development 122860, Fondazione Eni Enrico Mattei (FEEM).
    2. Michael Finus & Bianca Rundshagen, 2015. "Game Theory and Environmental and Resource Economics–In Honour of Alfred Endres," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 657-664, December.

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    More about this item

    Keywords

    International environmental agreements; River sharing problem; Negotiations; Coalitional bargaining game; Markov perfect equilibrium; Efficiency; Monopoly; C78; Q25;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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