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Market power in California's water market

Author

Listed:
  • Françeska Tomori

    (Universitat Rovira i Virgili)

  • Erik Ansink

    (Vrije Universiteit Amsterdam)

  • Harold Houba

    (Vrije Universiteit Amsterdam)

  • Nick Hagerty

    (Montana State University)

  • Charles Bos

    (Vrije Universiteit Amsterdam)

Abstract

We estimate market power in California's thin water market. Market frictions may distort the potential welfare gains from water marketing. We use a Nash-Cournot model and derive a closed-form solution for the extent of market power in a typical water market setting. We then use this solution to estimate market power in a newly assembled dataset on California's water economy. We show that, under the assumptions of the Cournot model, market power in this thin market is limited.

Suggested Citation

  • Françeska Tomori & Erik Ansink & Harold Houba & Nick Hagerty & Charles Bos, 2021. "Market power in California's water market," Tinbergen Institute Discussion Papers 21-011/VIII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20210011
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    References listed on IDEAS

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    Cited by:

    1. Harold Houba & Françeska Tomori, 2023. "Stackelberg Social Equilibrium in Water Markets," Games, MDPI, vol. 14(4), pages 1-9, July.

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    More about this item

    Keywords

    Water markets; Market power; California; Cournot-Nash;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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