A Cooperative Dynamic Environmental Game of Subgame Consistent Clean Technology Development

David W. K. Yeung and Leon A. Petrosyan ()
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David W. K. Yeung: Center of Game Theory, St. Petersburg State University, St. Petersburg 198904, Russia2SRS Consortium for Advanced Study in Cooperative Dynamic Games, Hong Kong Shue Yan University, Hong Kong, P. R. China
Leon A. Petrosyan: Faculty of Applied Mathematics-Control Processes, St. Petersburg State University, St. Petersburg 198904, Russia

International Game Theory Review (IGTR), 2016, vol. 18, issue 02, 1-23

Abstract: Cooperative adoption and development of clean technology play a key role to effectively solving the continual worsening industrial pollution problem. For cooperation over time to be credible, a subgame consistency solution which requires the agreed-upon optimality principle to remain in effect throughout the collaboration duration has to hold. In this paper, we present a cooperative dynamic game of collaborative environmental management with clean technology development. A subgame consistent cooperative scheme is derived. It is the first time that cooperative dynamic environmental games with clean technology development are analyzed. Given that there exist discrete choices of production techniques and switching to clean technology brings about cost savings and improved effectiveness, the group optimal solution cannot be obtained with standard differentiable optimization techniques. To overcome this problem the joint optimal solutions for all the possible patterns of production techniques are computed and the pattern with the highest joint payoff is then selected. The analysis widens the scope of study in collaborative environmental management.

Keywords: Cooperative dynamic games; subgame consistency; clean technology development; environmental management (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1142/S0219198916400089

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