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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.

Suggested Citation

  • 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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    6. Kaitala, Veijo & Maler, Karl-Goran & Tulkens, Henry, 1995. " The Acid Rain Game as a Resource Allocation Process with an Application to the International Cooperation among Finland, Russia and Estonia," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(2), pages 325-343, June.
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    10. Germain, Marc & Toint, Philippe & Tulkens, Henry & de Zeeuw, Aart, 2003. "Transfers to sustain dynamic core-theoretic cooperation in international stock pollutant control," Journal of Economic Dynamics and Control, Elsevier, vol. 28(1), pages 79-99, October.
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    Cited by:

    1. Bréchet, Thierry & Hritonenko, Natali & Yatsenko, Yuri, 2016. "Domestic environmental policy and international cooperation for global commons," Resource and Energy Economics, Elsevier, vol. 44(C), pages 183-205.
    2. 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.
    3. 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.

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