Mixture and distribution of different water qualitiesan experiment on vertical structure in a complex market
- Neugebauer, Tibor
- Kujal, Praveen
- Fatás Juberías, Enrique
- Georgantzis, Nikolaos
ISSN: 2340-6704, 0210-0266
Year of publication: 2004
Volume: 27
Issue: 75
Pages: 95-137
Type: Article
More publications in: Cuadernos de economía: Spanish Journal of Economics and Finance
Abstract
We report results from experimental markets in which two different qualities of water are supplied to two types of consumers: households and farmers. In the scenarios studied, we vary strategic complexity (and centralization) by varying the number of agents per market. Centralization of information by a multiproduct monopolist (scenario 1) improves market performance with respect to a duopoly (scenario 2). A downstream coordinator (scenario 3) succeeds in mitigating upstream market power. In a complex setup like ours, some centralization on the supply or the demand side may enhance market efficiency.