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Incentive equilibrium strategies of transboundary industrial pollution control under emission permit trading

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  • Huiquan Li
  • Shiping Mao

Abstract

In this paper, we investigate the incentive equilibrium strategies of two neighboring regions facing transboundary industrial pollution under abatement investment and emission permits trading in a differential game setting. Our paper can be viewed as an extension of the work of Yeung [2007. Dynamically consistent cooperative solution in a differential game of transboundary industrial pollution. Journal of Optimization Theory and Applications, 134, 143–160] in the context of the transboundary industrial pollution. Compared with the work of Yeung [2007. Dynamically consistent cooperative solution in a differential game of transboundary industrial pollution. Journal of Optimization Theory and Applications, 134, 143–160], our research significant features (i) introduce the emission permits trading into the transboundary industrial pollution control;(ii) take into account the pollution abatement investment; (iii) examine the incentive equilibrium strategies of transboundary industrial pollution control; and (iv) design an allocation mechanism for regions’ cooperative profits. Furthermore, we illustrate the results of the paper with a numerical example. The utility of this paper is how to make incentive equilibrium strategies in a situation where the neighboring regions facing transboundary industrial pollution under abatement investment and emission permits trading in a differential game setting.

Suggested Citation

  • Huiquan Li & Shiping Mao, 2019. "Incentive equilibrium strategies of transboundary industrial pollution control under emission permit trading," Journal of Management Analytics, Taylor & Francis Journals, vol. 6(2), pages 107-134, April.
  • Handle: RePEc:taf:tjmaxx:v:6:y:2019:i:2:p:107-134
    DOI: 10.1080/23270012.2019.1595187
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    Cited by:

    1. Ryle S. Perera & Kimitoshi Sato, 2023. "Ensuring Mutual Benefit in a Trans-boundary Industrial Pollution Control Problem," Computational Economics, Springer;Society for Computational Economics, vol. 62(1), pages 91-128, June.
    2. Li, Shoude & Zhang, Yingxuan, 2023. "Abatement technology innovation and pollution tax design: A dynamic analysis in monopoly," Energy Economics, Elsevier, vol. 119(C).

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