Amit, RK and Ramachandran, Parthasarathy (2013) A relational contract for water demand management. In: Urban Water Journal, 10 (3). pp. 209-215.
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For necessary goods like water, under supply constraints, fairness considerations lead to negative externalities. The objective of this paper is to design an infinite horizon contract or relational contract (a type of long-term contract) that ensures self-enforcing (instead of court-enforced) behaviour by the agents to mitigate the externality due to fairness issues. In this contract, the consumer is induced to consume at firm-supply level using the threat of higher fair price for future time periods. The pricing mechanism, computed in this paper, internalizes the externality and is shown to be economically efficient and provides revenue sufficiency.
| Item Type: | Journal Article |
|---|---|
| Publication: | Urban Water Journal |
| Publisher: | Taylor and Francis Group |
| Additional Information: | Copyright of this article belongs to Taylor and Francis Group. |
| Keywords: | Water Demand Management; Contract Theory; Relational Contracts |
| Department/Centre: | Division of Interdisciplinary Sciences > Management Studies |
| Date Deposited: | 21 Aug 2013 06:18 |
| Last Modified: | 21 Aug 2013 06:18 |
| URI: | http://eprints.iisc.ac.in/id/eprint/46987 |
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