The effects of environmental policies on the abatement investment decisions of a green firm

Saltari, Enrico; Travaglini, Giuseppe

doi:10.1016/j.reseneeco.2011.02.001

Cited by 57 publications

(33 citation statements)

References 32 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Lin and Huang (2011) demonstrated that the theory of Tobin's q and real options can be usefully employed to evaluate the feasibility of investing in energy-saving equipment. Saltari and Travaglini (2011) emphasized that, with irreversible capital and pollution uncertainty, the value of a firm captures the option value of the costly technology for disinvesting. Both these papers provide a new flexible thinking for decision making criteria in environmental issues.…”

Section: Resultsmentioning

confidence: 99%

Chapter 20 Optimal Abatement Investment and Environmental Policies Under Pollution Uncertainty

Saltari¹,

Travaglini²

2011

Frontiers of Economics and Globalization

Self Cite

View full text Add to dashboard Cite

In this paper we present a continuous time model with reversible abatement capital in order to analyze the effects of environmental policies on the value of the firm and investment decisions. We show that the effects depend on what sort of future policy are implemented. We focus on investment effects of changes in corrective taxes to control the use of polluting inputs, and subsidies to promote abatement investment. We show that (1) while taxes have a depressive effect on capital accumulation, subsidies boost investment; (2) the impact of these policies on the value of the firm is ambiguous. This latter result has important empirical implications insofar as investment are based on the average value of the firm rather than the (unobservable) marginal value.

show abstract

Section: Resultsmentioning

confidence: 99%

Chapter 20 Optimal Abatement Investment and Environmental Policies Under Pollution Uncertainty

Saltari¹,

Travaglini²

2011

Frontiers of Economics and Globalization

Self Cite

View full text Add to dashboard Cite

show abstract

“…Consider a multinational economy, which is comprised of two regions. Following Saltari et al [11] , the output ( ) of region ( = 1, 2) at time ( ∈ [0, +∞)) is a function of emissions ( ). That is,…”

Section: The Basic Modelmentioning

confidence: 99%

A Stochastic Differential Game of Transboundary Pollution under Knightian Uncertainty of Stock Dynamics

Cheng

2018

Mathematical Problems in Engineering

View full text Add to dashboard Cite

With the robust control framework of Hansen and Sargent (2001), this paper investigates a stochastic differential game of transboundary pollution between two regions under Knightian uncertainty of stock dynamics. Both regions are assumed to play a noncooperative and a cooperative game, and the worst-case pollution accumulation processes for discrete robustness parameters are characterized. Our objective is to identify both regions’ optimal output and emission levels and analyze the effects of the Knightian uncertainty of pollution stock dynamics on both regions’ optimization behavior. We illustrate the results with some numerical examples.

show abstract

“…Equation (12) indicates that, under noncooperation, optimal pollution tax rate ( 1 or 2 ) may depend on the regional pollutant ( 1 1 or 2 2 ) which is caused by the firms in home, but the regional pollutant ( 2 1 or 1 2 ) which is caused by the firms in neighbor may have no effect on optimal pollution tax rate. In addition, the optimal abatement effort of the region does not depend on the damage from the regional pollutant at home ( 1 1 or 2 2 ); this is because the abatement effort of the nation can only affect pollution stock and cannot affect current pollution.…”

Section: Proposition 2 the Government 'S Payoff Duringmentioning

confidence: 99%

“…(i) We present a stochastic differential game model of transboundary industrial pollution in which uncertain pollution stock dynamics are taken into account. It is because that uncertain pollution stock dynamics is frequent [2,[11][12][13]; actually many factors like unexpected changes in abatement technologies, the unexpected changes of decay rate of the pollutants, and so forth may incur uncertain pollution stock dynamics. (ii) We extend the model set by Huang et al [10] from finite-horizon level to infinite-horizon level; this is because, in many situations, the terminal time of the game, , is either very far in the future or unknown to the players.…”

Section: Introductionmentioning

confidence: 99%

A Cooperative Stochastic Differential Game of Transboundary Industrial Pollution between Two Asymmetric Nations

Zhang

2017

Mathematical Problems in Engineering

View full text Add to dashboard Cite

Considering the fact that transboundary pollution control calls for the cooperation between interested parties, this paper studies a cooperative stochastic differential game of transboundary industrial pollution between two asymmetric nations in infinite-horizon level. In this paper, we model two ways of transboundary pollution: one is an accumulative global pollutant with an uncertain evolutionary dynamic and the other is a regional nonaccumulative pollutant. In our model, firms and governments are separated entities and they play a Stackelberg game, while the governments of the two nations can cooperate in pollution reduction. We discuss the feedback Nash equilibrium strategies of governments and industrial firms, and it is found that the governments being cooperative in transboundary pollution control will set a higher pollution tax rate and make more pollution abatement effort than when they are noncooperative. Additionally, a payment distribution mechanism that supports the subgame consistent solution is proposed.

show abstract

The effects of environmental policies on the abatement investment decisions of a green firm

Cited by 57 publications

References 32 publications

Chapter 20 Optimal Abatement Investment and Environmental Policies Under Pollution Uncertainty

Chapter 20 Optimal Abatement Investment and Environmental Policies Under Pollution Uncertainty

A Stochastic Differential Game of Transboundary Pollution under Knightian Uncertainty of Stock Dynamics

A Cooperative Stochastic Differential Game of Transboundary Industrial Pollution between Two Asymmetric Nations

Contact Info

Product

Resources

About