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Negotiating municipalities-industrial factory wastewater treatment coalition project: an economic laboratory experiment
Šauer, Petr ; Kolínský, Ondřej ; Prášek, Jan
It is often the case that municipalities and industrial plants treat their wastewater separately bringing the municipalities wastewater to be treated at the industrial wastewater treatment plant and reused by the plant creates potential for social costs saving for both the municipalities and the private firm. In an economic laboratory experiment we demonstrate that such voluntary agreement could be achieved even despite the presence of information asymmetry. This follows our previous research on win-win voluntary agreements and the role of information asymmetry. The biggest challenge remaining to be addressed is the distribution of the extra cake, which in our results is mostly seized by the private firm.
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