A Stochastic Multiple Players Multi-Issues Bargaining Model for the Piave River Basin

39 Pages Posted: 10 Jul 2008

See all articles by Alessandra Sgobbi

Alessandra Sgobbi

Fondazione Eni Enrico Mattei (FEEM) ; CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici

Carlo Carraro

Ca' Foscari University of Venice; CMCC - Euro Mediterranean Centre for Climate Change (Climate Policy Division); IPCC; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Centre for European Policy Studies, Brussels; Green Growth Knowledge Platform

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Date Written: December 2007

Abstract

The objective of this paper is to investigate the usefulness of non-cooperative bargaining theory for the analysis of negotiations on water allocation and management. We explore the impacts of different economic incentives, a stochastic environment and varying individual preferences on players' strategies and equilibrium outcomes through numerical simulations of a multilateral, multiple issues, non-cooperative bargaining model of water allocation in the Piave River Basin, in the North East of Italy. Players negotiate in an alternating-offer manner over the sharing of water resources (quantity and quality). Exogenous uncertainty over the size of the negotiated amount of water is introduced to capture the fact that water availability is not known with certainty to negotiating players. We construct the players' objective function with their direct input. We then test the applicability of our multiple players, multi-issues, stochastic framework to a specific water allocation problem and conduct comparative static analyses to assess sources of bargaining power. Finally, we explore the implications of different attitudes and beliefs over water availability.

Keywords: bargaining, non-cooperative game theory, simulation models, uncertainty

JEL Classification: C61, C71, C78

Suggested Citation

Sgobbi, Alessandra and Carraro, Carlo, A Stochastic Multiple Players Multi-Issues Bargaining Model for the Piave River Basin (December 2007). CESifo Working Paper Series No. 2178, Available at SSRN: https://ssrn.com/abstract=1081279 or http://dx.doi.org/10.2139/ssrn.1081279

Alessandra Sgobbi

Fondazione Eni Enrico Mattei (FEEM) ( email )

Corso Magenta 63
20123 Milan
Italy

CMCC - Centro Euro-Mediterraneo sui Cambiamenti Climatici ( email )

via Augusto Imperatore, 16
Lecce, I-73100
Italy

Carlo Carraro (Contact Author)

Ca' Foscari University of Venice ( email )

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Venice, 30121
Italy
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HOME PAGE: http://www.carlocarraro.org/

CMCC - Euro Mediterranean Centre for Climate Change (Climate Policy Division) ( email )

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Green Growth Knowledge Platform ( email )

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HOME PAGE: http://www.greengrowthknowledge.org/

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