Monopoly Power and Distribution in Fragmented Markets: The Case of Groundwater

This paper examines monopoly power in the market for groundwater (irrigation water extracted by private tubewells), a market characterized by barriers to entry and spatial fragmentation. In Pakistan's Punjab region, groundwater and tenancy contracts are often interlinked, with share-tenants gai...

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Bibliographic Details
Published in:The Review of economic studies 2004-07, Vol.71 (3), p.783-808
Main Authors: Jacoby, Hanan G., Murgai, Rinku, Ur Rehman, Saeed
Format: Article
Language:English
Subjects:
Agricultural seasons
Canals
Crops
Customers
Economic power
Groundwater
L12
Landlords
Market entry
Monopolies
Monopoly
Monopoly power
O13
Pakistan
Prices
Q15
Tenancy
Tenants
Water
Watercourses
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Summary:This paper examines monopoly power in the market for groundwater (irrigation water extracted by private tubewells), a market characterized by barriers to entry and spatial fragmentation. In Pakistan's Punjab region, groundwater and tenancy contracts are often interlinked, with share-tenants gaining access to water through the use of their landlord's tubewell. An analysis of groundwater transactions shows that tenants of tubewell owners are charged lower prices than other customers. Tubewell owners and their tenants also use considerably more groundwater on their plots than other farmers. Using detailed price and quantity data, the efficiency and distributional implications of this monopoly power are explored.
ISSN:0034-6527
1467-937X
DOI:10.1111/j.1467-937X.2004.00304.x