Consistency and optimality in a dynamic game of pollution control II: Monopoly
This paper continues a line of research begun in Batabyal (1995a). I model the interaction between a regulator and a monopolistic, polluting firm as a Stackelberg differential game in which the regulator leads. The firm creates pollution, which results in a stock externality. I analyze the intertemporal effects of alternate pollution control measures. 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 dynamically consistent policies. Copyright Kluwer Academic Publishers 1996
Volume (Year): 8 (1996)
Issue (Month): 3 (October)
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