Buying cooperation in an asymmetric environmental differential game

Pascaux Smala Fanokoa, Issam Telahigue and Georges Zaccour

Journal of Economic Dynamics and Control, 2011, vol. 35, issue 6, 935-946

Abstract: We consider a two-player asymmetric differential game of pollution control. One player is non-vulnerable to pollution, or unwilling to consider damages when choosing her production policy in a non-cooperative game. We characterize the feedback-Nash equilibrium and the cooperative solution. We establish conditions under which the vulnerable player can buy the cooperation of the non-vulnerable player to control her emissions. We further use the Nash bargaining solution to allocate the total cooperative dividend between the two players and propose a time-consistent decomposition overtime of the total payoff.

Keywords: Environment; Differential; games; Cooperative; solution; Feedback-Nash; equilibrium; Time; consistency; Nash; bargaining; solution (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (11)

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