Dynamic games of international pollution control: A selective review
de Zeeuw,Aart
de Zeeuw,Aart
Abstract
A differential game is the natural framework of analysis for many problems in environmental economics. This chapter focuses on the game of international pollution control and more specifically on the game of climate change with one global stock of pollutants. The chapter has two main themes. First, the different noncooperative Nash equilibria (open loop, feedback, linear, nonlinear) are derived. In order to assess efficiency, the steady states are compared with the steady state of the full-cooperative outcome. The open-loop Nash equilibrium is better than the linear feedback Nash equilibrium, but a nonlinear feedback Nash equilibrium exists that is better than the open-loop Nash equilibrium. Second, the stability of international environmental agreements (or partial-cooperation Nash equilibria) is investigated, from different angles. The result in the static models that the membership game leads to a small stable coalition is confirmed in a dynamic model with an open-loop Nash equilibrium. The result that in an asymmetric situation transfers exist that sustain full cooperation under the threat that the coalition falls apart in case of deviations is extended to the dynamic context. The result in the static model that farsighted stability leads to a set of stable coalitions does not hold in the dynamic context if detection of a deviation takes time and climate damage is relatively important.
Description
Date
2018
Journal Title
Journal ISSN
Volume Title
Publisher
Springer
Research Projects
Organizational Units
Journal Issue
Keywords
differential games, multiple nash equilibria, international pollution control, climate change, partial cooperation, international environmental agreements, stability, non-cooperative games, cooperative games, evolutionary games, SDG 8 - Decent Work and Economic Growth, SDG 13 - Climate Action
Citation
de Zeeuw, A 2018, Dynamic games of international pollution control : A selective review. in T Basar & G Zaccour (eds), Handbook of Dynamic Game Theory. Springer, Cham, pp. 703-728.