Sharing a river with downstream externalities (Q2184005)

Summary: We consider the problem of efficient emission abatement in a multi polluter setting, where agents are located along a river in which net emissions accumulate and induce negative externalities to downstream riparians. Assuming a cooperative transferable utility game, we seek welfare distributions that satisfy all agents' participation constraints and, in addition, a fairness constraint implying that no coalition of agents should be better off than it were if all non-members of the coalition would not pollute the river at all. We show that the downstream incremental distribution, as introduced by \textit{S. Ambec} and \textit{Y. Sprumont} [J. Econ. Theory 107, No. 2, 453--462 (2002; Zbl 1033.91503)], is the only welfare distribution satisfying both constraints. In addition, we show that this result holds true for numerous extensions of our model.