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Sharing a river with downstream externalities

By Sarina Steinmann and Ralph Winkler

Abstract

We consider the problem of efficient emission abatement in a multi polluter setting, where agents are located along a river in which net emissions accumulate and induce negative externalities to downstream riparians. Assuming a cooperative transferable utility game, we seek welfare distributions that satisfy all agents' participation constraints and, in addition, a fairness constraint implying that no coalition of agents should be better off than it were if all non-members of the coalition would not pollute the river at all. We show that the downstream incremental distribution, as introduced by Ambec and Sprumont (2002), is the only welfare distribution satisfying both constraints. In addition, we show that this result holds true for numerous extensions of our model

Topics: C71, D62, Q53, ddc:330, downstream externalities, downstream incremental distribution, optimal emission abatement, river pollution
Publisher: Bern: Univ., Fac. of Business, Economics and Social Sciences, Dep. of Economics
Year: 2015
OAI identifier: oai:econstor.eu:10419/126615
Provided by: EconStor

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