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Sharing a polluted river network

Author

Listed:
  • Dong, Baomin
  • Ni, Debing
  • Wang, Yuntong

Abstract

A polluted river network is populated with agents (e.g., firms, villages, municipalities, or countries) located upstream and downstream. This river network must be cleaned, the costs of which must be shared among the agents. We model this problem as a cost sharing problem on a tree network. Based on the two theories in international disputes, namely the Absolute Territorial Sovereignty (ATS) and the Unlimitted Territorial Integrity (UTI), we propose three different cost sharing methods for the problem. They are the Local Responsibility Sharing (LRS), the Upstream Equal Sharing (UES), and the Downstream Equal Sharing (DES), respectively. The LRS and the UES generalize Ni and Wang ("Sharing a polluted river", Games Econ. Behav., 60 (2007), 176-186) but the DES is new. The DES is based on a new interpretation of the UTI. We provide axiomatic characterizations for the three methods. We also show that they coincide with the Shapley values of the three different games that can be defined for the problem. Moreover, we show that they are in the cores of the three games, respectively. Our methods can shed light on pollution abatement of a river network with multiple sovereignties.

Suggested Citation

  • Dong, Baomin & Ni, Debing & Wang, Yuntong, 2012. "Sharing a polluted river network," MPRA Paper 38839, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:38839
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    References listed on IDEAS

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    1. Wang, Yuntong, 2011. "Trading water along a river," Mathematical Social Sciences, Elsevier, vol. 61(2), pages 124-130, March.
    2. Carmen Marchiori, 2010. "Concern for Fairness and Incentives in Water Negotiations," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(4), pages 553-571, April.
    3. Ambec, S. & Ehlers, L., 2007. "Cooperation and equity in the river sharing problem," Working Papers 200705, Grenoble Applied Economics Laboratory (GAEL).
    4. van den Brink, Rene & Gilles, Robert P., 1996. "Axiomatizations of the Conjunctive Permission Value for Games with Permission Structures," Games and Economic Behavior, Elsevier, vol. 12(1), pages 113-126, January.
    5. Aadland, David & Kolpin, Van, 1998. "Shared irrigation costs: An empirical and axiomatic analysis," Mathematical Social Sciences, Elsevier, vol. 35(2), pages 203-218, March.
    6. Erik Ansink & Arjan Ruijs, 2008. "Climate Change and the Stability of Water Allocation Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 41(2), pages 249-266, October.
    7. S.C. Littlechild & G.F. Thompson, 1977. "Aircraft Landing Fees: A Game Theory Approach," Bell Journal of Economics, The RAND Corporation, vol. 8(1), pages 186-204, Spring.
    8. S. C. Littlechild & G. Owen, 1973. "A Simple Expression for the Shapley Value in a Special Case," Management Science, INFORMS, vol. 20(3), pages 370-372, November.
    9. D. Kilgour & Ariel Dinar, 2001. "Flexible Water Sharing within an International River Basin," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 18(1), pages 43-60, January.
    10. Hung, Ming-Feng & Shaw, Daigee, 2005. "A trading-ratio system for trading water pollution discharge permits," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 83-102, January.
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    Citations

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    Cited by:

    1. René van den Brink, 2017. "Games with a Permission Structure: a survey on generalizations and applications," Tinbergen Institute Discussion Papers 17-016/II, Tinbergen Institute.
    2. René van den Brink & Simin He & Jia-Ping Huang, 2015. "Polluted River Problems and Games with a Permission Structure," Tinbergen Institute Discussion Papers 15-108/II, Tinbergen Institute.
    3. Hougaard, Jens Leth & Moreno-Ternero, Juan D. & Tvede, Mich & Østerdal, Lars Peter, 2017. "Sharing the proceeds from a hierarchical venture," Games and Economic Behavior, Elsevier, vol. 102(C), pages 98-110.
    4. René Brink & P. Herings & Gerard Laan & A. Talman, 2015. "The Average Tree permission value for games with a permission tree," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 58(1), pages 99-123, January.
    5. Encarnacion Algaba & René van den Brink & Chris Dietz, 2015. "Power Measures and Solutions for Games under Precedence Constraints," Tinbergen Institute Discussion Papers 15-007/II, Tinbergen Institute.
    6. Alcalde-Unzu, Jorge & Gómez-Rúa, María & Molis, Elena, 2015. "Sharing the costs of cleaning a river: the Upstream Responsibility rule," Games and Economic Behavior, Elsevier, vol. 90(C), pages 134-150.

    More about this item

    Keywords

    River network; Water pollution; Cost sharing; the Shapley value;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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