Water Allocation Under Distribution Losses: Comparing Alternative Institutions
Ujjayant Chakravorty (),
Eithan Hochman (),
Chieko Umetsu () and
David Zilberman ()
Additional contact information
Eithan Hochman: Hebrew University of Jerusalem, Postal: Center for Agricultural Economic Research, Box 12, Rehovot 76100, Israel
No 2009-8, Working Papers from University of Alberta, Department of Economics
The distribution of water resources is characterized by increasing returns to scale. Distribution systems link 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)
JEL-codes: H41 Q25 Q28 (search for similar items in EconPapers)
Pages: 34 pages
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Journal Article: Water allocation under distribution losses: Comparing alternative institutions (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:albaec:2009_008
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