Feedback Nash equilibria for non-linear differential games in pollution control

G. Kossioris, M. Plexousakis, Anastasios Xepapadeas, Aart de Zeeuw and Karl‑Göran Mäler

Journal of Economic Dynamics and Control, 2008, vol. 32, issue 4, 1312-1331

Abstract: Dynamic problems of pollution and resource management with stock externalities often require a differential games framework of analysis. In addition they are represented realistically by non-linear transition equations. However, feedback Nash equilibrium (FBNE) solutions, which are the desired ones in this case, are difficult to obtain in problems with non-linear-quadratic structure. We develop a method to obtain numerically non-linear FBNE for a class of such problems, with a specific example for shallow lake pollution control. We compare FBNE solutions, by considering the entire equilibrium trajectories, with optimal management and open-loop solutions, and we show that the value of the best FBNE is in general worse than the open-loop and optimal management solutions.

Date: 2008
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Working Paper: Feedback Nash equilibria for non-linear differential games in pollution control (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:32:y:2008:i:4:p:1312-1331

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