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How do Markets Manage Water Resources? An Experiment

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  • Aurora García-Gallego
  • Nikolaos Georgantzís
  • Roberto Hernán-González
  • Praveen Kujal

Abstract

We experimentally test how a private monopoly, a duopoly and a public utility allocate water of differing qualities to households and farmers. Most of our results are in line with the theoretical predictions. Overexploitation of the resources is observed independently of the market structure. Stock depletion for the public utility is the fastest, followed by the private duopoly and private monopoly. On the positive aspects of centralized public management, we find that the average quality to price ratio offered by the public monopoly is substantially higher than that offered by the private monopoly or duopoly. Copyright Springer Science+Business Media B.V. 2012

Suggested Citation

  • Aurora García-Gallego & Nikolaos Georgantzís & Roberto Hernán-González & Praveen Kujal, 2012. "How do Markets Manage Water Resources? An Experiment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 53(1), pages 1-23, September.
    • Handle: RePEc:kap:enreec:v:53:y:2012:i:1:p:1-23
    DOI: 10.1007/s10640-012-9545-7
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    References listed on IDEAS

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    Cited by:

    1. Oana Brînzan & Marian Drăgoi & Dalia Bociort & Eugenia Țigan & Nicoleta Mateoc-Sîrb & Monica Lungu, 2020. "A Market-Based Economic Instrument to Better Use Water in Agriculture," Sustainability, MDPI, vol. 12(4), pages 1-12, February.
    2. Noussair, C.N. & van Soest, D.P., 2014. "Economic Experiments and Environmental Policy : A Review," Discussion Paper 2014-001, Tilburg University, Center for Economic Research.

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