A differential game of international pollution control with evolving environmental costs

Masoudi, Nahid; Zaccour, Georges

doi:10.1017/s1355770x13000399

Cited by 28 publications

(13 citation statements)

References 21 publications

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“…There exist a number of papers in the dynamic-game literature that consider environmental damages from emissions in a dynamic setting: for example, the early papers by van der Ploeg and de Zeeuw (1992), Long (1992), Dockner and Long (1993), and the literature review by Jørgensen et al (2010), and recently, Masoudi and Zaccour (2013). In this literature, emissions are a control variable and the issue is to determine the optimal emissions rate so as to reduce the environmental damage coming from the excessive accumulation of GHGs.…”

Section: Discussionmentioning

confidence: 99%

“…Accounting for any additional benefits of forests to their owners would decrease this value accordingly. Second, following many others, it has been argued by Masoudi and Zaccour (2013) that "compared to other pressing economic issues, such as eradicating extreme poverty, offering essential services to their citizens (education, health care, etc.) and building infrastructure, the environment is seen as a luxury service that developing countries cannot really afford in the short term."…”

Section: The Modelmentioning

confidence: 99%

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Cooperation for sustainable forest management: An empirical differential game approach

Andrés-Domenech

Martín‐Herrán

Zaccour

2015

Ecological Economics

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We model the role of the world's forests as a major carbon sink and consider the impact that forest depletion has on the accumulation of CO 2 in the atmosphere. Two types of agents are considered: forest owners who exploit the forest and draw economic revenues in the form of timber and agricultural use of deforested land; and a non-forest-owner group who pollutes and suffers the negative externality of having a decreasing forest stock. We retrieve the cooperative solution for this game and show the cases in which cooperation enables a partial reduction in the negative externality. We analyze when it is jointly profitable to abate emissions, when it is profitable to reduce net deforestation, and when it is optimal to do both (abate and reduce net deforestation). Assuming that the players adopt the Nash bargaining solution to share the total dividend of cooperation, we determine the total amount that the non-forest owners have to transfer to forest owners. Next, we define a time-consistent payment schedule that allocates over time the total transfer.

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Section: Discussionmentioning

confidence: 99%

Section: The Modelmentioning

confidence: 99%

Cooperation for sustainable forest management: An empirical differential game approach

Andrés-Domenech

Martín‐Herrán

Zaccour

2015

Ecological Economics

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“…Jørgensen [23] studied a differential game of waste management (disposal) between neighboring regions with strategic and stock externalities. Masoudi and Zaccour [24] considered a two-player differential game of international emissions to represent the interactions between developed and developing countries, and showed their cooperative and non-cooperative solutions. Wrzaczek, Shevkoplyas and Kostyunin [25] applied a differential game to formulate an overlapping generation model on optimal emissions with a continuous age structure.…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal Coordination Strategy for International Production Planning and Pollution Abating under Cap-and-Trade Regulations

Xin

Peng

Sun

2019

IJERPH

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Because both pollution emissions and production policies often are international in scope, it is necessary to find optimal coordination strategies for international production planning and pollution abating. Differential game models are developed for multiple neighboring countries to reach optimal decisions on their production planning and pollution abating under cap-and-trade regulations. Non-cooperative and cooperative differential games are presented to depict the optimal tradeoffs between production planning and pollution abating. Hamilton-Jacobi-Bellman (HJB) equations are then employed to analyze the asymmetric and symmetric feedback solutions. Numerical simulations are used to illustrate the results. Five different dividends are also discussed. With the proposed strategies, more improvement will be directed toward production supplies and environmental issues than ever before.

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“…It is widely accepted that the developed countries are responsible for most historical greenhouse gas emissions [3], whereas developing countries are still topping economy prosperity in their agenda. The asymmetry between developed countries (the "North") and the developing nations (the "South") typically gives rise to a slate of environmental issues, which is termed as the "North-South" problem [4,5].…”

Section: Introductionmentioning

confidence: 99%

Carbon Tariff vs. Emission Cap of North–South Countries in Response to Manufacturer’s Production

2020

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Economy prosperity has concurrently caused severe emission damages worldwide, which calls for strong abatement efforts from both nations and manufacturers. In this paper, we establish a two-stage game to investigate the policy selections of a foreign developed country (North) and a domestic developing country (South), and the response of a Southern manufacturer. The welfare-maximizing governments in the two countries participate in an announcement game of environmental policies where the South decides on whether or not to enforce an emission cap and the North chooses either a carbon tariff or no policy, after which the profit-seeking manufacturer reacts to make production strategies and distribute differentiated products to the two countries. Our analysis shows that under an emission cap, the manufacturer shrinks product quantities in both markets, cuts emissions, and suffers profit losses. A carbon tariff has similar impacts on the manufacturer except for unaffected domestic sales. In addition, equilibrium policy selections for the two governments depend on the degree of emission damage in the South: A moderate level of damage generates an equilibrium in the scenario of the unilateral tariff policy where the Northern welfare peaks and the Southern well-being is not the worst; a severe damage leads to a prisoner’s dilemma, since the two governments would arrive at an equilibrium in the bilateral-policy scenario, but it is dominated by a no-policy scheme. What is more, we find that a negotiation between the two governments is able to help them out of the dilemma and achieve a Pareto-improving outcome.

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A differential game of international pollution control with evolving environmental costs

Cited by 28 publications

References 21 publications

Cooperation for sustainable forest management: An empirical differential game approach

Cooperation for sustainable forest management: An empirical differential game approach

Optimal Coordination Strategy for International Production Planning and Pollution Abating under Cap-and-Trade Regulations

Carbon Tariff vs. Emission Cap of North–South Countries in Response to Manufacturer’s Production

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