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Competition versus coopertion in groundwater extraction: A stochastic framework with heteregoneous agents

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  • Laukkanen, Marita
  • Koundouri, Phoebe

Abstract

We analyze a game with N farmers that extract groundwater from a common aquifer of small storage capacity. Our aim is to compare the socially optimal, myopic and feedback extraction strategies, the latter arising from competitive interaction between extracting agents. Our extension to existing literature is that we consider heterogeneous farmers, facing uncertainty deriving from stochastic rainfall. The farmers differ in terms of their choice of irrigation technology, which results in different farmer-speci�c impact on the aquifer recharge rate. We illustrate the implications of the di¤erent strategies on extraction rates, groundwater table levels and welfare attained, via simulations based on data from the Kiti aquifer in Cyprus.

Suggested Citation

  • Laukkanen, Marita & Koundouri, Phoebe, 2006. "Competition versus coopertion in groundwater extraction: A stochastic framework with heteregoneous agents," MPRA Paper 41910, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:41910
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    References listed on IDEAS

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    Cited by:

    1. Wang, Chenggang & Segarra, Eduardo, 2011. "The Economics of Commonly Owned Groundwater When User Demand Is Perfectly Inelastic," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 0(Number 1), pages 1-26, April.
    2. Dionisios Latinopoulos & Eftichios S. Sartzetakis, 2015. "Using Tradable Water Permits in Irrigated Agriculture," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(3), pages 349-370, March.

    More about this item

    Keywords

    common property resources; groundwater management; dif- ference games; strategic externality;

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

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