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Carbon capture and storage and transboundary pollution: a differential game approach

Author

Listed:
  • Luisito Bertinelli

    () (CREA, University of Luxembourg)

  • Carmen Camacho

    () (CNRS, Centre d’Economie de la Sorbonne, Paris 1)

  • Benteng Zou

    () (CREA, University of Luxembourg)

Abstract

We study the strategic behavior of two countries facing transboundary pollution under a differential game setting. In our model, the reduction of both pollution and CO2 concentration occur through the creation of pollution sinks, rather than through the adoption of cleaner technologies. To our knowledge, this is the first formal attempt to model carbon capture and storage. Furthermore, we provide the explicit short-run dynamics for this game with symmetric open-loop and a special Markovian Nash strategies. Furthermore, we analyze and compare these strategies and the games’ steady states along some balanced growth paths. Our results show that if the initial level of pollution is relatively high, state dependent emissions reductions can lead to higher overall environmental quality, hence, feedback strategy leads to less social waste.

Suggested Citation

  • Luisito Bertinelli & Carmen Camacho & Benteng Zou, 2011. "Carbon capture and storage and transboundary pollution: a differential game approach," CREA Discussion Paper Series 11-17, Center for Research in Economic Analysis, University of Luxembourg.
  • Handle: RePEc:luc:wpaper:11-17
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Massol, Olivier & Tchung-Ming, Stéphane & Banal-Estañol, Albert, 2015. "Joining the CCS club! The economics of CO2 pipeline projects," European Journal of Operational Research, Elsevier, vol. 247(1), pages 259-275.
    2. Fan, Jin & He, Haonan & Wu, Yanrui, 2016. "Personal carbon trading and subsidies for hybrid electric vehicles," Economic Modelling, Elsevier, vol. 59(C), pages 164-173.
    3. Ouardighi, Fouad El & Sim, Jeong Eun & Kim, Bowon, 2016. "Pollution accumulation and abatement policy in a supply chain," European Journal of Operational Research, Elsevier, vol. 248(3), pages 982-996.
    4. Guo, Jian-Xin & Zhu, Lei & Fan, Ying, 2016. "Emission path planning based on dynamic abatement cost curve," European Journal of Operational Research, Elsevier, vol. 255(3), pages 996-1013.
    5. Benchekroun, Hassan & Martín-Herrán, Guiomar, 2016. "The impact of foresight in a transboundary pollution game," European Journal of Operational Research, Elsevier, vol. 251(1), pages 300-309.
    6. repec:gam:jsusta:v:8:y:2016:i:4:p:365:d:68273 is not listed on IDEAS
    7. repec:eee:phsmap:v:490:y:2018:i:c:p:139-147 is not listed on IDEAS
    8. Bowon Kim & Jeong Eun Sim, 2016. "Supply Chain Coordination and Consumer Awareness for Pollution Reduction," Sustainability, MDPI, Open Access Journal, vol. 8(4), pages 1-20, April.

    More about this item

    Keywords

    Transboundary pollution; carbon capture and storage; differential game;

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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