Game Theory and its Application on Optimal Allocation of Water Resources

Document Type : Original Article

Authors

1 Faculty of Economics, University of Tehran

2 Department of Economics, International Campus of University of Tehran, Kish Island

Abstract

Water as a vital element has been a rout of political, national and international challenges for years due to its unequal supply and geographical distribution. A practical approach for optimal allocation of water resources in game theory through explanation and interpretation of current situation in a cooperative game framework and building up an efficient solution could be helpful. Since in the cooperative game, players can be aware of other players’ decisions and strategies clearly, game will be performed based on the profit sharing between players’ coalition and controversially there will be a competitive decision-making situation due to various coalitions between players. In this study, Atrak river drainage basin has been investigated. A cooperative game between beneficiaries has been introduced, their strategies have been explained and finally “Shapley Value” has been evaluated for each player and efficient scenario is assessed. Based on optimal allocation of water resources scenario in north east provinces, environmental improvement and national income increase will be expected.
JEL Classification: C71, D47, Q01, Q25, Q50, Q51, Q52
Key Words: Environmental Economics, Water Crisis, Efficient Allocation of Water Resources, Cooperative Game, Shapley Value

Keywords

References

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Program and Development Research
Volume 1, Issue 3
June 2020
Pages 123-166

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