Optimal policies for environmental assets under spatial heterogeneity and global awareness

Emmanuelle Augeraud-V\'eron, Daria Ghilli, Fausto Gozzi and Marta Leocata

Papers from arXiv.org

Abstract: The aim of this paper is to formulate and study a stochastic model for the management of environmental assets in a geographical context where in each place the local authorities take their policy decisions maximizing their own welfare, hence not cooperating each other. A key feature of our model is that the welfare depends not only on the local environmental asset, but also on the global one, making the problem much more interesting but technically much more complex to study, since strategic interaction among players arise. We study the problem first from the $N$-players game perspective and find open and closed loop Nash equilibria in explicit form. We also study the convergence of the $N$-players game (when $n\to +\infty$) to a suitable Mean Field Game whose unique equilibrium is exactly the limit of both the open and closed loop Nash equilibria found above, hence supporting their meaning for the game. Then we solve explicitly the problem from the cooperative perspective of the social planner and compare its solution to the equilibria of the $N$-players game. Moreover we find the Pigouvian tax which aligns the decentralized closed loop equilibrium to the social optimum.

Date: 2025-10
New Economics Papers: this item is included in nep-env and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2510.21397 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2510.21397

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().