Article (Scientific journals)
The Irreversible Pollution Game
Boucekkine, Raouf; Ruan, Weihua; Zou, Benteng
2023In Journal of Environmental Economics and Management, p. 102841
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Keywords :
Differential game; Asymmetric pollution cost; Markov Perfect Equilibria; Irreversible pollution; Non-concave pollution decay
Abstract :
[en] We study a 2-country differential game with irreversible pollution. Irresability is of a hard type: above a certain threshold level of pollution, the self-cleaning capacity of Nature drops to zero. Accordingly, the game includes a non-concave feature, and we characterize both the cooperative and non-cooperative versions with this general non-LQ property. We deliver full analytical results for the existence of Markov Perfect Equilibria. We first demonstrate that when pollution costs are equal across players (symmetry), irreversible pollution regimes are more frequently reached than under cooperation. Second, we study the implications of asymmetry in the pollution cost. We find far nontrivial results on the reachability of the irreversible regime. However, we unambiguously prove that, for the same total cost of pollution, provided the irreversible regime is reached in both the symmetric and asymmetric cases, long-term pollution is larger in the symmetric case, reflecting more intensive free-riding under symmetry.
Disciplines :
Economic systems & public economics
Author, co-author :
Boucekkine, Raouf
Ruan, Weihua
Zou, Benteng  ;  University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM)
External co-authors :
yes
Language :
English
Title :
The Irreversible Pollution Game
Publication date :
2023
Journal title :
Journal of Environmental Economics and Management
ISSN :
0095-0696
eISSN :
1096-0449
Publisher :
Elsevier, United States
Pages :
102841
Peer reviewed :
Peer Reviewed verified by ORBi
Available on ORBilu :
since 20 April 2022

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