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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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  • Smala Fanokoa, Pascaux & Telahigue, Issam & Zaccour, Georges, 2011. "Buying cooperation in an asymmetric environmental differential game," Journal of Economic Dynamics and Control, Elsevier, vol. 35(6), pages 935-946, June.
    • Handle: RePEc:eee:dyncon:v:35:y:2011:i:6:p:935-946
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    References listed on IDEAS

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    4. Siciliani, Luigi & Rune Straume, Odd & Cellini, Roberto, 2013. "Quality competition with motivated providers and sluggish demand," Journal of Economic Dynamics and Control, Elsevier, vol. 37(10), pages 2041-2061.
    5. Voss, Achim & Schopf, Mark, 2021. "Lobbying over exhaustible-resource extraction," European Economic Review, Elsevier, vol. 135(C).
    6. Yiwen Chen & Nora Paulus & Xi Wan & Benteng Zou, 2024. "To Deploy or Not to Deploy CCS Abatement, and When : A Differential Game Perspective," DEM Discussion Paper Series 24-07, Department of Economics at the University of Luxembourg.
    7. 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.
    8. Yuankan Huang & Takehiro Inohara, 2023. "Stable Markov perfect equilibria in the asymmetric differential-game duopoly with a renewable resource," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(1), pages 45-63, April.
    9. Jiayi Sun & Deqing Tan, 2023. "Non-cooperative Mode, Cost-Sharing Mode, or Cooperative Mode: Which is the Optimal Mode for Desertification Control?," Computational Economics, Springer;Society for Computational Economics, vol. 61(3), pages 975-1008, March.

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