Market power in California's water market

Identifier:  imarina:9331521

Handle: https://hdl.handle.net/20.500.11797/imarina9331521

Authors:  Tomori, F; Ansink, E; Houba, H; Hagerty, N; Bos, C

Abstract:
We estimate market power in California's surface water market. Market power 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 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 Nash-Cournot model, market power in this thin market is limited.