How do markets manage water resources? An experiment
García-Gallego, A., Georgantzis, N., Hernán-González, R. and Kujal, P. (2012) How do markets manage water resources? An experiment. Environmental and Resource Economics, 53 (1). pp. 1-23. ISSN 1573-1502
To link to this item DOI: 10.1007/s10640-012-9545-7
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.