Market Power in California's Water Market

Open seminar with Associate Professor Erik Ansink, Vrije Universiteit, Amsterdam.

Erik Ansink is an Associate Professor at Vrije Universiteit, Amsterdam. His research is on cooperation and conflict in the management and conservation of water, nature, and climate, using tools and models from game theory, political economy, and experimental economics.

His seminar is based on his working paper "Market Power in California's Water Market", which can be read here. The paper is written by Françeska Tomori, Erik Ansink, Harold Houba, Nick Hagerty, and Charles Bos.

We estimate market power in California’s thin water market. Market frictions may distort the potential welfare gains from water marketing. We use a Nash-Cournot model and derive a closed-form solution for the extent of market power in a typical water market setting. We then use this solution to estimate market power in a newly assembled dataset on California’s water economy. We show that, under the assumptions of the Cournot model, market power in this thin market is limited.

This seminar is open to all.