On the optimal management of environmental stock externalities

Anastasios Xepapadeas

Proceedings of the National Academy of Sciences, 2022, vol. 119, issue 24, e2202679119

Abstract: A very important class of pollutants includes those for which the pollution stock is built into the ambient environment as emissions accumulate at a rate exceeding that which natural processes can absorb. Examples are greenhouse gases which cause climate change, accumulation of nutrients which contribute to nitrate pollution, and acid depositions in soil. This paper studies the management of environmental stock pollutants when potential polluters decide about pollution by taking into account the actions of others, and pollutants accumulate with time but are also transported across space. Directions are explored for extending traditional management approaches to pollutants evolving in both space and time when polluters act strategically, and spatially dependent vs spatially uniform environmental and resource management policies are discussed.

Keywords: spatial diffusion; dispersion kernel; open-loop Nash equilibrium; feedback Nash equilibrium; optimal emission tax (search for similar items in EconPapers)
Date: 2022
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