Farsight and Myopia in a Transboundary Pollution Game
AbstractWe study the impact of farsightedness in a transboundary pollution game; i.e. the ability of a country to forecast the relationship between current emissions and future levels of pollution and thus on future damages. We show that when all countries are farsighted their payo s are larger than when all countries are myopic. However in the case where one myopic country becomes farsighted we show that the welfare impact of farsightedness on that country is ambiguous. Farsightedness may be welfare reducing for the country that acquires it. This is due to the reaction of the other farsighted countries to that country's acquisition of farsight. The country that acquires farsight reduces its emissions while the other farsighted countries extend their emissions. The overall impact on total emissions is ambiguous.
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Bibliographic InfoPaper provided by Centre interuniversitaire de recherche en économie quantitative, CIREQ in its series Cahiers de recherche with number 06-2012.
Length: 19 pages
Date of creation: 2012
Date of revision:
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myopia; differential games; transboundary pollution;
Find related papers by JEL classification:
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- D90 - Microeconomics - - Intertemporal Choice - - - General
- Q59 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Other
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