Groundwater Use Decisions Are Strategic Complements

28 Pages Posted: 29 Mar 2021

See all articles by Caleb M. Koch

Caleb M. Koch

ETH Zurich, Department of Humanities, Social and Political Sciences

Heinrich H. Nax

ETH Zürich; University of Zurich

Date Written: February 28, 2021

Abstract


We test whether the decisions in a common-pool resource game are better modeled game-theoretically as strategic substitutes or complements using an individual-level dataset of groundwater usage that accounts for 3% of US irrigated agriculture. We find support for strategic complements, suggesting that reciprocity– and/or race-to-depletion–like dynamics are key to understanding groundwater usage.

Keywords: Common-pool resources – US agriculture – groundwater – dynamic game theory – panel data – identification

JEL Classification: Q25

Suggested Citation

Koch, Caleb M. and Nax, Heinrich H., Groundwater Use Decisions Are Strategic Complements (February 28, 2021). Available at SSRN: https://ssrn.com/abstract=3813301 or http://dx.doi.org/10.2139/ssrn.3813301

Caleb M. Koch

ETH Zurich, Department of Humanities, Social and Political Sciences ( email )

Zurich
Switzerland

Heinrich H. Nax (Contact Author)

ETH Zürich ( email )

Rämistrasse 101
ZUE F7
Zürich, 8092
Switzerland

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

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