# 15-001/VIII (2015-01-06)

Author(s)
Erik Ansink, VU University Amsterdam, the Netherlands; Michael Gengenbach, Wageningen University, the Netherlands; Hans-Peter Weikard, Wageningen University, the Netherlands
Keywords:
river sharing, water trade, market emergence, property rights, coalition stability
JEL codes:
D62, C72, Q25

We analyse river sharing games in which a set of agents located along a river shares the available water. Using coalition theory, we find that the potential benefits of water trade may not be sufficient to make all agents in the river cooperate and acknowledge property rights as a prerequisite for trade. Specifically, a complete market for river water may not emerge if there are four or more agents along the river. Instead, a partial market may emerge where a subset of agents trades river water while other agents can take some of the river water that passes their territory.