Transboundary Pollution Control and Competitiveness Concerns in a Two-Country Differential Game

Simone Marsiglio and Nahid Masoudi

No 2019/1, CFDS Discussion Paper Series from Center for Financial Development and Stability at Henan University, Kaifeng, Henan, China

Abstract: We analyze a transboundary pollution control problem in a heterogeneous two-country differential game in which each country’s regulator cares for the implications of environmental policy on its compet- itiveness. We characterize and compare the noncooperative and the cooperative solutions, showing that under both scenarios, the heterogeneous countries impose different tax rates despite such competitiveness concerns. This may suggest that, while implementing some kind of mitigation policy is necessary to com- bat climate change, a universally homogeneous environmental tax may not be either desirable or optimal.

Keywords: Climate Change; Competitiveness; Mitigation Policies; Transboundary Pollution (search for similar items in EconPapers)
JEL-codes: C70 Q54 Q58 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2019-01
New Economics Papers: this item is included in nep-ene, nep-env and nep-gth
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Persistent link: https://EconPapers.repec.org/RePEc:fds:dpaper:201901

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