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On the optimal management of environmental stock externalities

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  • Anastasios Xepapadeas

Abstract

Following a brief review of the management of environmental externalities under strategic interactions in the traditional temporal domain, results are extended to the spatiotemporal domain. Conditions for spatial open-loop and feedback Nash equilibria, along with conditions for the benchmark cooperative solution, are presented and compared. A simplified numerical example illustrates the spatial patterns emerging at a steady state under Fickian diffusion and dispersal kernels, and the inefficiency of spatially-flat emission taxes. This conceptual framework could provide new research areas.

Suggested Citation

  • Anastasios Xepapadeas, 2022. "On the optimal management of environmental stock externalities," DEOS Working Papers 2216, Athens University of Economics and Business.
    • Handle: RePEc:aue:wpaper:2216
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    File URL: http://wpa.deos.aueb.gr/docs/PNAS.April.2022.pdf
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    Cited by:

    1. Fabio Antoniou & Panos Hatzipanayotou & Nikos Tsakiris, 2023. "Regulatory Stringency and Emission Leakage Mitigation," DEOS Working Papers 2302, Athens University of Economics and Business.

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    Keywords

    spatial diffusion; dispersion kernel; open-loop Nash equilibrium; feedback Nash equilibrium; cooperative solution; steady state; optimal emission tax;
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