The Role of Search Frictions and Trading Ratios in Tradable Permit Markets

A systems perspective on water markets: barriers, bright spots, and building blocks for the next generation

“…Experimental and quasi-experimental research designs have enabled causal inferences about the effects of different policy levers and technologies, such as in West Bengal, where farmers who owned electric pumps sold more water to smallholders than farmers who owned diesel pumps due to cost differences across technologies [26]. In the last few years, studies from several US water markets have used micro-level trading data to estimate the environmental performance of water market transactions [27,28].…”

“…hydro-economic and socialhydrological systems) coupled with access to low-cost datasets have enabled more complete and realistic models, and examine a range of assumptions around human behavior and policy settings. The work by Pujol and colleagues [30] is a point of departure, offering a theoretical framework that accounts for transaction costs in optimization studies to assess how market frictions can constrain gains from trade [28]. More generally, hydro-economic models have integrated historical datasets to assess the responsiveness of water markets to scarcity and shocks.…”