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Water, externality and strategic interdependence: a general equilibrium analysis

โœ Scribed by Terry Roe; Xinshen Diao


Publisher
John Wiley and Sons
Year
2000
Tongue
English
Weight
182 KB
Volume
12
Category
Article
ISSN
0954-1748

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โœฆ Synopsis


In a region with shared water aquifers, the use of water by one country becomes an externality to another. A policy to subsidize water is shown to lead to both countries being made worse o. However, such policies tend to receive the support of special interests having water rights, and those in sectors such as agriculture that uses water relatively intensively. A unilateral water tax will reduce own country's GDP and rise GDP in the other country. Only when both countries impose a tax co-operatively, will GDP rise in both countries.


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