Decentralized mechanisms for river sharing
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Decentralized mechanisms for river sharing. / Gudmundsson, Jens; Hougaard, Jens Leth; Ko, Chiu Yu.
In: Journal of Environmental Economics and Management, Vol. 94, 2019, p. 67-81.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Decentralized mechanisms for river sharing
AU - Gudmundsson, Jens
AU - Hougaard, Jens Leth
AU - Ko, Chiu Yu
PY - 2019
Y1 - 2019
N2 - We study decentralized implementation of efficient outcomes through multilateral bargaining in the river sharing problem. We introduce a class of mechanisms in the form of two-stage games in which agents first announce consumption levels and then bargain over monetary compensations. The defining characteristic of a mechanism is the way it assigns bargaining power to agents as a consequence of their locations, inflows, and consumption decisions. We first determine which mechanisms give incentives to always allocate the water efficiently, in the sense that, regardless of the agents' benefit functions, equilibrium play always yields an efficient outcome. Among these, we take an axiomatic approach to single out three mechanisms that guarantee a fair division of the welfare gain obtained through cooperation along the river.
AB - We study decentralized implementation of efficient outcomes through multilateral bargaining in the river sharing problem. We introduce a class of mechanisms in the form of two-stage games in which agents first announce consumption levels and then bargain over monetary compensations. The defining characteristic of a mechanism is the way it assigns bargaining power to agents as a consequence of their locations, inflows, and consumption decisions. We first determine which mechanisms give incentives to always allocate the water efficiently, in the sense that, regardless of the agents' benefit functions, equilibrium play always yields an efficient outcome. Among these, we take an axiomatic approach to single out three mechanisms that guarantee a fair division of the welfare gain obtained through cooperation along the river.
KW - Bargaining
KW - Consistency
KW - Decentralized mechanism
KW - Efficient allocation
KW - Implementation
KW - River sharing
U2 - 10.1016/j.jeem.2019.01.004
DO - 10.1016/j.jeem.2019.01.004
M3 - Journal article
AN - SCOPUS:85060708072
VL - 94
SP - 67
EP - 81
JO - Journal of Environmental Economics and Management
JF - Journal of Environmental Economics and Management
SN - 0095-0696
ER -
ID: 212910394