Article (Scientific journals)
Optimal coalition splitting with heterogenous strategies
Boucekkine, Raouf; Camcho, Carmen; Ruan, Weihua et al.
2023In Fulbright Review of Economics and Policy
Peer reviewed
 

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Keywords :
Coalition splitting; environmental agreements; precommitment vs Markovian
Abstract :
[en] We consider a group of players initially members of a coalition managing cooperatively a public bad, in this case, the stock of pollution. Countries are technologically heterogeneous but the pollution damage is uniform. We essentially attempt to characterize the conditions under which a country may eventually split and when it splits within an infinite horizon multi-stage differential game. In contrast to the existing literature, we do not assume that after splitting, the splitting player and the remaining coalition will adopt Markovian strategies. Instead, we assume that the latter will remain committed to the collective control of pollution and play open-loop, while the splitting player plays Markovian. Within a full linear-quadratic model, we characterize the optimal strategies. We later compare with the outcomes of the case where the splitting player and the remaining coalition play both Markovian. We highlight several interesting results in terms of the implications for long- term pollution levels and the duration of coalitions with heterogeneous strategies.
Disciplines :
General economics & history of economic thought
Author, co-author :
Boucekkine, Raouf
Camcho, Carmen
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 :
Optimal coalition splitting with heterogenous strategies
Publication date :
September 2023
Journal title :
Fulbright Review of Economics and Policy
Peer reviewed :
Peer reviewed
Available on ORBilu :
since 04 October 2022

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