Computing Alternating Offers and Water Prices in Bilateral River Basin Management

Tinbergen Institute Discussion Paper No. TI 06-095/1

31 Pages Posted: 7 Nov 2006

See all articles by Harold Houba

Harold Houba

VU University Amsterdam, Department of Econometrics; VU University Amsterdam, Tinbergen Institute

Multiple version iconThere are 2 versions of this paper

Date Written: October 2006

Abstract

This contribution deals with the fundamental critique in Dinar et al. (1992, Theory and Decision 32) on the use of Game theory in water 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 and property rights result 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). Directions for future research are provided.

Keywords: International River Management, Negotiation Theory, Game Theory, Computations, Non-transferable utility, Property rights, Walrasian equilibrium prices, Applied General Equilibrium model

JEL Classification: C72, C78, D50, D58

Suggested Citation

Houba, Harold E. D. and Houba, Harold E. D., Computing Alternating Offers and Water Prices in Bilateral River Basin Management (October 2006). Tinbergen Institute Discussion Paper No. TI 06-095/1, Available at SSRN: https://ssrn.com/abstract=942727 or http://dx.doi.org/10.2139/ssrn.942727

Harold E. D. Houba (Contact Author)

VU University Amsterdam, Tinbergen Institute ( email )

De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands

HOME PAGE: http://personal.vu.nl/h.e.d.houba/

VU University Amsterdam, Department of Econometrics ( email )

De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands

HOME PAGE: http://personal.vu.nl/h.e.d.houba/

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