If the regulatory goal is to reduce aggregate water use, the entitlement system will have a single market-clearing price that is equal to a tax that would achieve the same aggregate pumping. In this case, the marginal benefits of water are equalised across all traders, and a frictionless transferable entitlement scheme will by definition achieve the optimal allocation (e.g. Montgomery 1972; Sunding et al., The more binding the constraint on total water used, the larger the equilibrium entitlement price.