Water allocation under distribution losses: Comparing alternative institutions
Ujjayant Chakravorty (),
Chieko Umetsu () and
David Zilberman ()
Journal of Economic Dynamics and Control, 2009, vol. 33, issue 2, 463-476
The distribution of water resources is characterized by increasing returns to scale. Distribution links water generation to its end-use. Standard economic analysis overlooks the interaction among these micro-markets - generation, distribution and end-use. We compare water allocation when there is market power in each micro-market. These outcomes are compared with benchmark cases - social planning and a competitive business-as-usual regime. Simulations suggest that institutions with market power in generation and end-use generate significantly higher welfare than the distribution monopoly and the competitive regime. However, if the policy goal is to maximize the size of the grid, a distribution monopoly is preferred.
Keywords: Infrastructure; Market; power; Spatial; models; Vertical; integration; Water; markets (search for similar items in EconPapers)
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Working Paper: Water Allocation Under Distribution Losses: Comparing Alternative Institutions (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:33:y:2009:i:2:p:463-476
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