Asymmetric information and the pricing of natural resources: The case of unmetered water

Rodney B.W. Smith, Yacov Tsur

Research output: Contribution to journalArticlepeer-review

27 Scopus citations

Abstract

This paper uses mechanism design theory to propose a mechanism to price irrigation water when farmers are heterogeneous in their production technologies (adverse selection) and their individual water uses are unobserved (moral hazard). Unmetered irrigation water is often priced by imposing per-acre fees on cultivated acreage or by charging per-unit fees on observable inputs or outputs. The offered pricing procedure is based on the observed output and achieves a first-best outcome when implementation is free of transaction costs.

Original languageEnglish
Pages (from-to)392-403
Number of pages12
JournalLand Economics
Volume73
Issue number3
DOIs
StatePublished - Aug 1997

Fingerprint

Dive into the research topics of 'Asymmetric information and the pricing of natural resources: The case of unmetered water'. Together they form a unique fingerprint.

Cite this