Water allocation under distribution losses: comparing alternative institutionsJournal of Economic Dynamics and Control (2009)
AbstractThe distribution of water resources is characterized by increasing returns to scale. Distribution links 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.
- Market power,
- Spatial models,
- Vertical integration,
- Water markets
Citation InformationUjjayant N Chakravorty, Eithan Hochman, Chieko Umetsu and David Zilberman. "Water allocation under distribution losses: comparing alternative institutions" Journal of Economic Dynamics and Control (2009)
Available at: http://works.bepress.com/chakravorty/13/