Optimal coalition splitting with heterogenous strategies

Raouf Boucekkine (), Carmen Camacho (), Weihua Ruan () and Benteng Zou
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Carmen Camacho: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Weihua Ruan: Purdue University Northwest, CUT - Centre for Unframed Thinking - ESC [Rennes] - ESC Rennes School of Business, ESC [Rennes] - ESC Rennes School of Business

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Abstract: 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 longterm pollution levels and the duration of coalitions with heterogenous strategies.

Keywords: Coalition splitting; Environmental agreements; Differential games; Multistage optimal control; Precommitment vs Markovian (search for similar items in EconPapers)
Date: 2022-09
New Economics Papers: this item is included in nep-ene, nep-env and nep-gth
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Related works:
Working Paper: Optimal coalition splitting with heterogenous strategies (2023)
Working Paper: Optimal coalition splitting with heterogenous strategies (2023)
Working Paper: Optimal coalition splitting with heterogenous strategies (2022)
Working Paper: Optimal coalition splitting with heterogenous strategies (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:psewpa:halshs-03770401

DOI: 10.1108/FREP-05-2023-0021

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