Environmental and Resource Economics

, Volume 53, Issue 1, pp 1–23 | Cite as

How do Markets Manage Water Resources? An Experiment

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

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.

Keywords

Resource overexploitation Public utility Private monopoly Duopoly Water quality Experiments 

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Copyright information

© Springer Science+Business Media B.V. 2012

Authors and Affiliations

  • Aurora García-Gallego
    • 1
  • Nikolaos Georgantzís
    • 1
    • 2
  • Roberto Hernán-González
    • 2
    • 3
  • Praveen Kujal
    • 4
  1. 1.LEE, Department of EconomicsUniversitat Jaume ICastellónSpain
  2. 2.Universidad de GranadaGranadaSpain
  3. 3.Chapman UniversityOrangeUSA
  4. 4.Department of EconomicsUniversidad Carlos IIIMadridSpain

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