Revealed preferences of groundwater usage: decisions as strategic complements, not substitutes
24 Pages Posted: 29 Mar 2021
Date Written: February 28, 2021
We investigate the strategic nature of farmers’ groundwater usage with a rich dataset from the American Midwest. We propose a new revealed preference test for the groundwater interaction as a dynamic game. We reject a view of groundwater usage decisions as strategic substitutes in favor of strategic complements as a better description.
Keywords: Groundwater – dynamic game theory – revealed preferences – strategic complements – strategic substitutes
JEL Classification: Q25
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