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The polluted ecosystem game

Author

Listed:
  • W.A. Brock
  • W.D. Dechert

Abstract

Purpose - The purpose of this paper is to address the issue of optimal management of ecosystems by developing a dynamic model of strategic behavior by users/communities of an ecosystem such as a lake, which is subject to pollution resulting from the users. More specifically, it builds a model of two ecosystems that are spatially connected. Design/methodology/approach - The paper uses the techniques of optimal control theory and game theory. Findings - The paper uncovers sufficient conditions under which the analysis of the dynamic game can be converted to an optimal problem for a pseudo authority. It is shown that if the discount rate on the future is high enough relative to ecological self‐restoration parameters then multiple stable states appear. In this case, if the pollution level is high enough it is too costly in terms of what must be given up today to restore the damaged system. By using computational methods, the paper evaluates the relative strengths of lack of coordination, strength of ecosystem self‐cleaning forces, size of discount rates, etc. Originality/value - The methodology as well as findings can help to devise an optimal management strategy over time for ecosystems.

Suggested Citation

  • W.A. Brock & W.D. Dechert, 2008. "The polluted ecosystem game," Indian Growth and Development Review, Emerald Group Publishing Limited, vol. 1(1), pages 7-31, April.
    • Handle: RePEc:eme:igdrpp:v:1:y:2008:i:1:p:7-31
    DOI: 10.1108/17538250810868116
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    Citations

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    Cited by:

    1. Engelbert Dockner & Florian Wagener, 2014. "Markov perfect Nash equilibria in models with a single capital stock," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 56(3), pages 585-625, August.
    2. Fouad Ouardighi & Hassan Benchekroun & Dieter Grass, 2014. "Controlling pollution and environmental absorption capacity," Annals of Operations Research, Springer, vol. 220(1), pages 111-133, September.
    3. Moghayer, S. & Wagener, F.O.O., 2009. "Genesis of indifference thresholds and infinitely many indifference points in discrete time infinite horizon optimisation problems," CeNDEF Working Papers 09-14, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.

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