Towards an understanding of tradeoffs between regional wealth, tightness of a common environmental constraint and the sharing rules

Raouf Boucekkine (), Jacek Krawczyk () and Thomas Vallee

Working Papers from HAL

Abstract: Consider a country with two regions that have developed differently so that their current levels of energy efficiency differ. Each region's production involves the emission of pollutants, on which a regulator might impose restrictions. The restrictions can be related to pollution standards that the regulator perceives as binding the whole country (e.g., imposed by international agreements like the Kyoto Protocol). We observe that the pollution standards define a common constraint Upon the joint strategy space of the regions. We propose a game theoretic model with a coupled constraints equilibrium as a solution to the regulator's problem of avoiding excessive pollution. The regulator can direct the regions to implement the solution by using a political pressure, or compel them to employ it by using the coupled constraints' Lagrange multipliers as taxation coefficients. We specify a stylised model of the Belgian regions of Flanders and Wallonia that face a joint constraint, for which the regulator wants to develop a sharing rule. We analytically and numerically analyse the equilibrium regional production levels as a function of the pollution standards and of the sharing rules. We thus provide the regulator with an array of equilibria that he (or she) can select for implementation. For the computational results, we use NIRA, which is a piece of software designed to min-maximise the associated Nikaido-Isoda function.

Date: 2009
Note: View the original document on HAL open archive server: https://hal.science/hal-00422486
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-00422486/document (application/pdf)

Related works:
Journal Article: Towards an understanding of tradeoffs between regional wealth, tightness of a common environmental constraint and the sharing rules (2010)
Working Paper: Towards an understanding of tradeoffs between regional wealth, tightness of a common environmental constraint and the sharing rules (2010)
Working Paper: Towards an understanding of tradeoffs between regional wealth, tightness of a common environmental constraint and the sharing rules (2010)
Working Paper: Towards an understanding of tradeoffs between regional wealth, tightness of a common environmental constraint and the sharing rules (2008)
Working Paper: Towards an understanding of tradeoffs between regional wealth, tightness of a common environmental constraint and the sharing rules (2008)
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:hal:wpaper:hal-00422486

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().