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Buying cooperation in an asymmetric environmental differential game

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  • Smala Fanokoa, Pascaux
  • Telahigue, Issam
  • Zaccour, Georges

Abstract

We consider a two-player asymmetric differential game of pollution control. One player is non-vulnerable to pollution, or unwilling to consider damages when choosing her production policy in a non-cooperative game. We characterize the feedback-Nash equilibrium and the cooperative solution. We establish conditions under which the vulnerable player can buy the cooperation of the non-vulnerable player to control her emissions. We further use the Nash bargaining solution to allocate the total cooperative dividend between the two players and propose a time-consistent decomposition overtime of the total payoff.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 35 (2011)
Issue (Month): 6 (June)
Pages: 935-946

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Handle: RePEc:eee:dyncon:v:35:y:2011:i:6:p:935-946

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Web page: http://www.elsevier.com/locate/jedc

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Keywords: Environment Differential games Cooperative solution Feedback-Nash equilibrium Time consistency Nash bargaining solution;

References

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  1. Zeeuw, A.J. de, 1998. "The acid rain differential game," Open Access publications from Tilburg University urn:nbn:nl:ui:12-77117, Tilburg University.
  2. Kaitala, Veijo & Pohjola, Matti, 1990. "Economic Development and Agreeable Redistribution in Capitalism: Efficient Game Equilibria in a Two-Class Neoclassical Growth Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(2), pages 421-38, May.
  3. Ploeg, F. van der & Zeeuw, A.J. de, 1992. "International aspects of pollution control," Open Access publications from Tilburg University urn:nbn:nl:ui:12-377516, Tilburg University.
  4. Kaitala, Veijo & Pohjola, Matti & Tahvonen, Olli, 1992. " An Economic Analysis of Transboundary Air Pollution between Finland and the Former Soviet Union," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(3), pages 409-24.
  5. Steffen Jørgensen & Guiomar Martín-Herrán & Georges Zaccour, 2005. "Sustainability Of Cooperation Overtime In Linear-Quadratic Differential Games," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 7(04), pages 395-406.
  6. Kaitala, V. & Mäler, K.-G. & Tulkens, H., . "The acid rain game as a resource allocation process with an application to the international cooperation among Finland, Russia and Estonia," CORE Discussion Papers RP -1150, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  7. Germain, M. & Toint, Ph. & Tulkens, H. & Zeeuw, A.J. de, 2003. "Transfers to sustain dynamic core-theoretic cooperation in international stock pollutant control," Open Access publications from Tilburg University urn:nbn:nl:ui:12-112000, Tilburg University.
  8. Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, April.
  9. Jorgensen, Steffen & Zaccour, Georges, 2001. "Time consistent side payments in a dynamic game of downstream pollution," Journal of Economic Dynamics and Control, Elsevier, vol. 25(12), pages 1973-1987, December.
  10. Haurie, Alain & Pohjola, Matti, 1987. "Efficient equilibria in a differential game of capitalism," Journal of Economic Dynamics and Control, Elsevier, vol. 11(1), pages 65-78, March.
  11. Veijo Kaitala & Matti Pohjola & Olli Tahvonen, 1992. "Transboundary air pollution and soil acidification: A dynamic analysis of an acid rain game between Finland and the USSR," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 2(2), pages 161-181, March.
  12. Petrosjan, Leon & Zaccour, Georges, 2003. "Time-consistent Shapley value allocation of pollution cost reduction," Journal of Economic Dynamics and Control, Elsevier, vol. 27(3), pages 381-398, January.
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Cited by:
  1. Calvo, Emilio & Rubio, Santiago J., 2013. "Dynamic Models of International Environmental Agreements: A Differential Game Approach," International Review of Environmental and Resource Economics, now publishers, vol. 6(4), pages 289-339, April.
  2. Luigi Siciliani & Odd Rune Straume & Roberto Cellini, 2011. "Quality competition with motivated providers and sluggish demand," NIPE Working Papers 14/2011, NIPE - Universidade do Minho.

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