Induced effects and technological innovation with strategic environmental policy

Atsuyuki Ohyama and Motoh Tsujimura

European Journal of Operational Research, 2008, vol. 190, issue 3, 834-854

Abstract: This paper investigates an environmental policy designed to reduce the emission of pollutants under uncertainty, where the agents' problem is formulated as an optimal stopping problem. We first analyze the single-agent's case according to Pindyck [Pindyck, R.S., 2002. Optimal timing problems in environmental economics. Journal of Economic Dynamics and Control 26, 1677-1697]. We then extend the model to the case in which there are two competing agents. Therefore, we consider the external economic effects that are peculiar to an agent's environmental policy decision. Finally, we consider the effect of technological innovation. The results of the analysis suggest that if there are two competing agents, they implement environmental policy simultaneously. Furthermore, the threshold for implementing environmental policy is higher when there are two agents, and how long these two agents take to implement environmental policy depends on the magnitude of the external economic effect. Furthermore, when we consider the effect of technological innovation, we show that the incentive to be the leader occurs if an additional condition is satisfied.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377-2217(07)00882-X
Full text for ScienceDirect subscribers only

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:eee:ejores:v:190:y:2008:i:3:p:834-854

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().