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A Dynamic Game of Emissions Pollution with Uncertainty and Learning

Author

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  • Nahid Masoudi
  • Marc Santugini
  • Georges Zaccour

Abstract

We introduce learning in a dynamic game of international pollution, with ecological uncertainty. We characterize and compare the feedback non-cooperative emissions strategies of players when the players do not know the distribution of ecological uncertainty but they gain information (learn) about it. We then compare our learning model with the benchmark model of full information, where players know the distribution of ecological uncertainty. We find that uncertainty due to anticipative learning induces a decrease in total emissions, but not necessarily in individual emissions. Further, the effect of structural uncertainty on total and individual emissions depends on the beliefs distribution and bias. Moreover, we obtain that if a player’s beliefs change toward more optimistic views or if she feels that the situation is less risky, then she increases her emissions while others react to this change and decrease their emissions.

Suggested Citation

  • Nahid Masoudi & Marc Santugini & Georges Zaccour, 2015. "A Dynamic Game of Emissions Pollution with Uncertainty and Learning," Cahiers de recherche 1501, CIRPEE.
  • Handle: RePEc:lvl:lacicr:1501
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    References listed on IDEAS

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    1. Kolstad, Charles D., 1996. "Learning and Stock Effects in Environmental Regulation: The Case of Greenhouse Gas Emissions," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 1-18, July.
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    Citations

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    Cited by:

    1. Mao, Liang, 2017. "Designing International Environmental Agreements under Participation Uncertainty," MPRA Paper 86248, University Library of Munich, Germany.
    2. repec:spr:dyngam:v:8:y:2018:i:3:d:10.1007_s13235-018-0260-z is not listed on IDEAS
    3. Mao, Liang, 2017. "Designing International Environmental Agreements under Participation Uncertainty," MPRA Paper 79145, University Library of Munich, Germany.
    4. repec:eee:jeeman:v:91:y:2018:i:c:p:118-132 is not listed on IDEAS

    More about this item

    Keywords

    Pollution emissions; Dynamic games; Uncertainty; Learning;

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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