Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87042
Authors: 
Ansink, Erik
Houba, Harold
Year of Publication: 
2010
Series/Report no.: 
Tinbergen Institute Discussion Paper 10-054/1
Abstract: 
Water markets with market power are analysed as multi-market Cournot competition in which the river structure constrains access to local markets and limited resources impose capacity constraints. Conditions for uniqueness are identified. Lerner indices are larger under binding resource constraints. The number of cases explodes in the number of local markets. Under quadratic benefit functions and symmetric constant marginal extraction costs, closed-form solutions for selected cases are derived, and numerical implementation through a single optimization program is available. Upstream locations face less competition than downstream. Observed price patterns in the Goulburn-Murray Irrigation District are consistent with the theoretical results.
Subjects: 
Water markets
oligopoly
market power
Cournot-Walras equilibrium
JEL: 
C72
C73
Q25
Document Type: 
Working Paper

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