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How do markets manage water resources?. An experiment on resource market (de) centralization with endogenous quality

Praveen Kujal (), Nikolaos Georgantzís () and Aurora García-Gallego ()

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: We test how a monopoly, a duopoly and a public monopoly manage and allocate water resources. Stock depletion for the public monopoly is fastest. However, it reaches the optimal stock level towards the end of the experimental sessions. The private monopoly and duopoly maintain inefficiently high levels of stock throughout the sessions. The average quality to price ratio offered by the public monopoly is substantially higher than that offered by the private monopoly or duopoly. A clear result from the experiments is that a public monopoly offers the highest (average) quality to price ratio and has the fastest rate of stock depletion compared to a private monopoly or duopoly.

Date: 2006-04
New Economics Papers: this item is included in nep-com, nep-exp and nep-mic
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