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Consistency and optimality in a dynamic game of pollution control I: Competition

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  • Amitrajeet Batabyal

Abstract

I model the interaction between a regulator and polluting firms as a Stackelberg differential game in which the regulator leads. The firms create pollution, which results in a stock extermality. I analyze the intertemporal effects of alternate pollution control measures in a competitive industry. The principal issue here concerns the dynamic inconsistency of the optimal solution. Inter alia, I compare the steady state levels of pollution under optimal and under time consistent policies. Copyright Kluwer Academic Publishers 1996

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  • Amitrajeet Batabyal, 1996. "Consistency and optimality in a dynamic game of pollution control I: Competition," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 8(2), pages 205-220, September.
    • Handle: RePEc:kap:enreec:v:8:y:1996:i:2:p:205-220
    DOI: 10.1007/BF00357364
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    References listed on IDEAS

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    1. Karp, Larry & Newbery, David M., 1993. "Intertemporal consistency issues in depletable resources," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 3, chapter 19, pages 881-931, Elsevier.
    2. Buiter, Willem H., 1984. "Policy Evaluation and Design for Continuous Time Linear Rational Expectations Models: Some Recent Developments," CEPR Discussion Papers 15, C.E.P.R. Discussion Papers.
    3. Frederick Ploeg & Aart Zeeuw, 1992. "International aspects of pollution control," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(2), pages 117-139, March.
    4. Amitrajeet Batabyal, 1996. "Consistency and optimality in a dynamic game of pollution control II: Monopoly," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 8(3), pages 315-330, October.
    5. Karp, Larry, 1984. "Optimality and consistency in a differential game with non-renewable resources," Journal of Economic Dynamics and Control, Elsevier, vol. 8(1), pages 73-97, October.
    6. Batabyal, Amitrajeet A., 1995. "Leading issues in domestic environmental regulation: A review essay," Ecological Economics, Elsevier, vol. 12(1), pages 23-39, January.
    7. Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
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    Cited by:

    1. Batabyal, Amitrajeet A, 1998. "On land use, minerals development, and institutional design in the American west," Resources Policy, Elsevier, vol. 24(3), pages 139-146, September.
    2. Amitrajeet Batabyal, 1996. "Consistency and optimality in a dynamic game of pollution control II: Monopoly," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 8(3), pages 315-330, October.
    3. Halkos, George & Papageorgiou, George, 2012. "Simple taxation schemes on non–renewable resources extraction," MPRA Paper 40945, University Library of Munich, Germany.
    4. Saket, Mohammad Javad & Maleki, Abbas & Hezaveh, Erfan Doroudgar & Karimi, Mohammad Sadegh, 2019. "Institutional analysis on impediments over fuel consumption reduction at Iran's transportation niches," Energy Policy, Elsevier, vol. 129(C), pages 861-867.
    5. Mehrnoosh Khademi & Massimiliano Ferrara & Bruno Pansera & Mehdi Salimi, 2015. "A dynamic game on Green Supply Chain Management," Papers 1503.04772, arXiv.org.
    6. Marie-Laure Breuillé, 2007. "Tradable deficit permits: a way to ensure sub-national fiscal discipline?," Working Papers hal-04139221, HAL.
    7. Thomas Vallée, 2018. "Comparison of different Stackelberg solutions in a deterministic dynamic pollution control: the time inconsistency problem revisited," Working Papers halshs-01843717, HAL.
    8. Thomas Vallée, 1997. "Comparison of different Stackelberg solutions in a deterministic dynamic pollution control," Levine's Working Paper Archive 1406, David K. Levine.
    9. Herbert Dawid & Christophe Deissenberg & Pavel Ševčik, 2005. "Cheap Talk, Gullibility, and Welfare in an Environmental Taxation Game," Springer Books, in: Alain Haurie & Georges Zaccour (ed.), Dynamic Games: Theory and Applications, chapter 0, pages 175-192, Springer.
    10. Halkos, George, 2010. "Dynamic regulations in non –renewable resources oligopolistic markets," MPRA Paper 24774, University Library of Munich, Germany.
    11. Eisenack, Klaus & Edenhofer, Ottmar & Kalkuhl, Matthias, 2012. "Resource rents: The effects of energy taxes and quantity instruments for climate protection," Energy Policy, Elsevier, vol. 48(C), pages 159-166.
    12. A. Ganji & D. Khalili & M. Karamouz & K. Ponnambalam & M. Javan, 2008. "A Fuzzy Stochastic Dynamic Nash Game Analysis of Policies for Managing Water Allocation in a Reservoir System," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 22(1), pages 51-66, January.

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    More about this item

    Keywords

    environmental economics; regulation; tax; dynamic; game;
    All these keywords.

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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