Bargaining in River Basin Committees: Rules Versus Discretion

In this paper, we introduce a game-theoretical non-cooperative model of bargaining to analyse project funding in the French river basin com- mittees. After sorting out some of the main theoretical predictions, we proceed with an empirical application to the subsidy policy of French Wa- ter Agencies. The theoretical model of bargaining is simulated for various risk preferences, and a reduced-form estimation of the distribution of sub- sidies is performed. We find some evidence in support of the predictions regarding the role of bargaining in decision-making for water management.