Does Information Asymmetry Impact Sub-Regions’ Cooperation of Regional Water Resource Allocation?

Li Pan, Xudong Chen, Lu Zhao and Anran Xiao
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Li Pan: Business School, Sichuan University, Chengdu 610064, China
Xudong Chen: College of Management Science, Chengdu University of Technology, Chengdu 610059, China
Lu Zhao: Business School, Sichuan University, Chengdu 610064, China
Anran Xiao: College of Management Science, Chengdu University of Technology, Chengdu 610059, China

IJERPH, 2019, vol. 16, issue 21, 1-16

Abstract: Water resources allocation is an urgent problem for basin authorities. In order to obtain greater economic benefits from limited water supplies, sub-regions must cooperate with each other. To study the influence of cooperation among sub-regions and the symmetry of cooperation information on the interests of the basin authority and each sub-region, this study proposes a regional water allocation model in three different situations: (1) non-cooperation; (2) cooperation and information symmetry; (3) cooperation and information asymmetry. The proposed model clearly reflects the Stackelberg game relationship between the basin authority and sub-regions. Finally, the model is applied to the Qujiang River Basin in China, and the decisions of the basin authority and sub-regional managers of the Qujiang River Basin under three different situations are discussed. The results show that regional cooperation benefits both the cooperative regions and the social welfare value of the entire river basin, when compared with non-cooperation.

Keywords: water allocation; bi-level optimization; regional cooperation; information asymmetry (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2019
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