Revealed preferences of groundwater usage: decisions as strategic complements, not substitutes

24 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 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

Suggested Citation

Koch, Caleb M. and Nax, Heinrich H., Revealed preferences of groundwater usage: decisions as strategic complements, not substitutes (February 28, 2021). Available at SSRN: https://ssrn.com/abstract=3813328 or http://dx.doi.org/10.2139/ssrn.3813328

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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