Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/220053 
Year of Publication: 
2020
Series/Report no.: 
Tinbergen Institute Discussion Paper No. TI 2020-016/II
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
This paper develops a model of conflict resolution over scarce water in a trans-boundary river. In our model, we consider countries that are located along a river and made a military investment. Given these investments and their location along the river, they sequentially bargain over the surplus of water, or decide to engage in a military conflict with their upstream neighbour. The probability of winning a military conflict is determined by a contest success function which depends on the military investments made before. We speak about a peaceful agreement if the countries rationally decide to bargain over the water instead of engaging into a military conflict. We show that, if all benefit functions are nonnegative, increasing and concave, then for every level of military investment, there always exists a peaceful agreement where every country prefers to bargain peacefully for the water. We provide a scenario that yields one such a peaceful agreement.
Subjects: 
River sharing
peaceful agreement
contest success function
subgame perfect equilibrium
JEL: 
C78
D62
D74
Q25
Document Type: 
Working Paper

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