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The international stock pollutant control: a stochastic formulation with transfers

  • Romera, Rosario
  • Casas, Omar J.
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    This paper provides a formulation of a stochastic dynamic game that arise in the real scenario of international environmental agreements on the transnational pollution control. More specifically, this agreements try to reduce the environmental damage caused by the stock pollutant that accumulates in the atmosphere, such as CO2. To improve the non-cooperative equilibrium among countries, we propose the criteria of the minimization of the expected discounted total cost with monetary transfers between the countries involved as an incentive to cooperation. Moreover, it considers the formulation of Stochastic Dynamic Games as Markov Decision Processes, using tools of Stochastic Optimal Control and Stochastic Dynamic Programming. The performance of the proposed schemes is illustrated by its application to such environmental problem.

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    File URL: http://e-archivo.uc3m.es/bitstream/handle/10016/11874/ws112217.pdf?sequence=1
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    Paper provided by Universidad Carlos III de Madrid. Departamento de Estadística in its series DES - Working Papers. Statistics and Econometrics. WS with number ws112217.

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    Date of creation: Jul 2011
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    Handle: RePEc:cte:wsrepe:ws112217
    Contact details of provider: Web page: http://portal.uc3m.es/portal/page/portal/dpto_estadistica

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    1. Chander, P. & Tulkens, H., . "A core-theoretic solution for the design of cooperative agreements on transfrontier pollution," CORE Discussion Papers RP 1158, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Carlo Carraro & Johan Eyckmans & Michael Finus, 2006. "Optimal Transfers and Participation Decisions in International Environmental Agreements," Working Papers 2006_44, Department of Economics, University of Venice "Ca' Foscari".
    3. Eyckmans, Johan & Tulkens, Henry, 2003. "Simulating coalitionally stable burden sharing agreements for the climate change problem," Resource and Energy Economics, Elsevier, vol. 25(4), pages 299-327, October.
    4. Henry Tulkens & Parkash Chander, 1997. "The Core of an Economy with Multilateral Environmental Externalities," International Journal of Game Theory, Springer;Game Theory Society, vol. 26(3), pages 379-401.
    5. van der Ploeg, F. & de Zeeuw, A.J., 1990. "International aspects of pollution control," Discussion Paper 1990-65, Tilburg University, Center for Economic Research.
    6. Dechert, W.D. & O'Donnell, S.I., 2006. "The stochastic lake game: A numerical solution," Journal of Economic Dynamics and Control, Elsevier, vol. 30(9-10), pages 1569-1587.
    7. Santiago Rubio & Begoña Casino, 2005. "Self-enforcing international environmental agreements with a stock pollutant," Spanish Economic Review, Springer;Spanish Economic Association, vol. 7(2), pages 89-109, 06.
    8. Petrosjan, Leon & Zaccour, Georges, 2003. "Time-consistent Shapley value allocation of pollution cost reduction," Journal of Economic Dynamics and Control, Elsevier, vol. 27(3), pages 381-398, January.
    9. Germain, M. & Toint, Ph. & Tulkens, H. & de Zeeuw, A.J., 2003. "Transfers to sustain dynamic core-theoretic cooperation in international stock pollutant control," Other publications TiSEM 8953bc6e-fc65-4fd7-a2d1-6, Tilburg University, School of Economics and Management.
    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.
    11. Keller, Klaus & Bolker, Benjamin M. & Bradford, D.F.David F., 2004. "Uncertain climate thresholds and optimal economic growth," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 723-741, July.
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