COMPUTING ALTERNATING OFFERS AND WATER PRICES IN BILATERAL RIVER BASIN MANAGEMENT

Harold Houba

International Game Theory Review (IGTR), 2008, vol. 10, issue 03, 257-278

Abstract: This contribution addresses the fundamental critique in Dinaret al.[1992,Theory and Decision32] on the use of game theory in river basin management: People are reluctant to monetary transfers unrelated to water prices and game theoretic solutions impose a computational burden. For the bilateral alternating-offers model, a single optimization program significantly reduces the computational burden. Furthermore, water prices andproperty rightsresult from exploiting the Second Welfare Theorem. Both issues are discussed and applied to a bilateral version of the theoretical river basin model in Ambec and Sprumont [2002,Journal of Economic Theory107]. Directions for future research are provided.

Keywords: Bilateral river basin management; alternating offers; computation; water prices; walrasian equilibrium; second welfare theorem; property rights; non-transferable utility; Subject Classification: C72; Subject Classification: C78; Subject Classification: D50; Subject Classification: D58 (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 C7 D5 D7 M2 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (21)

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Working Paper: Computing Alternating Offers and Water Prices in Bilateral River Basin Management (2006)
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DOI: 10.1142/S0219198908001935

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