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Transboundary Pollution Control and Competitiveness Concerns in a Two-Country Differential Game

Author

Listed:
  • Simone Marsiglio

    (Department of Economcis, University of Pisa, and Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan)

  • Nahid Masoudi

    (Memorial University of Newfoundland, and Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan)

Abstract

We analyze a transboundary pollution control problem in a heterogeneous two-country differential game in which each country’s regulator cares for the implications of environmental policy on its compet- itiveness. We characterize and compare the noncooperative and the cooperative solutions, showing that under both scenarios, the heterogeneous countries impose different tax rates despite such competitiveness concerns. This may suggest that, while implementing some kind of mitigation policy is necessary to com- bat climate change, a universally homogeneous environmental tax may not be either desirable or optimal.

Suggested Citation

  • Simone Marsiglio & Nahid Masoudi, 2019. "Transboundary Pollution Control and Competitiveness Concerns in a Two-Country Differential Game," CFDS Discussion Paper Series 2019/1, Center for Financial Development and Stability at Henan University, Kaifeng, Henan, China.
    • Handle: RePEc:fds:dpaper:201901
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    File URL: http://cfds.henuecon.education/images/dpaper/WP_1_2019_Transboundary_Pollution_Control.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Climate Change; Competitiveness; Mitigation Policies; Transboundary Pollution;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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