Carbon capture and storage and transboundary pollution: a differential game approach

Luisito Bertinelli, Carmen Camacho and Benteng Zou

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: We study the strategic behavior of two countries facing transboundary pollution under a differential game setting. In our model, the reduction of both pollution and CO2 concentration occur through the creation of pollution sinks, rather than through the adoption of cleaner technologies. To our knowledge, this is the first formal attempt to model carbon capture and storage. Furthermore, we provide the explicit short-run dynamics for this game with symmetric open-loop and a special Markovian Nash strategies. Furthermore, we analyze and compare these strategies and the games’ steady states along some balanced growth paths. Our results show that if the initial level of pollution is relatively high, state dependent emissions reductions can lead to higher overall environmental quality, hence, feedback strategy leads to less social waste.

Keywords: Transboundary pollution; carbon capture and storage; differential game (search for similar items in EconPapers)
JEL-codes: C73 Q52 Q55 Q58 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-ene, nep-env and nep-gth
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Citations: View citations in EconPapers (2)

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Journal Article: Carbon capture and storage and transboundary pollution: A differential game approach (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:11-17

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