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Equilibrium Investment Strategies in Foreign Environmental Projects

M. Breton, Guiomar Martin-Herran and Georges Zaccour
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M. Breton: GERAD and CREF, HEC Montréal

Journal of Optimization Theory and Applications, 2006, vol. 130, issue 1, No 2, 23-40

Abstract: Abstract This paper proposes a two-player, finite-horizon differential game model to analyze joint implementation in environmental projects, one of the flexible mechanisms considered in the Kyoto Protocol. Using a nonlinear specification for the damage costs, we show that, if joint implementation is available, both players will invest in environmental projects in their own location and one of the players will invest abroad, the identity of that player changing at most once during the planning horizon.

Keywords: Environment; joint implementation; differential games; economics (search for similar items in EconPapers)
Date: 2006
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DOI: 10.1007/s10957-006-9086-8

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