Farsight and Myopia in a Transboundary Pollution Game

Hassan Benchekroun and Guiomar Martin-Herran

Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ

Abstract: We study the impact of farsightedness in a transboundary pollution game; i.e. the ability of a country to forecast the relationship between current emissions and future levels of pollution and thus on future damages. We show that when all countries are farsighted their payo s are larger than when all countries are myopic. However in the case where one myopic country becomes farsighted we show that the welfare impact of farsightedness on that country is ambiguous. Farsightedness may be welfare reducing for the country that acquires it. This is due to the reaction of the other farsighted countries to that country's acquisition of farsight. The country that acquires farsight reduces its emissions while the other farsighted countries extend their emissions. The overall impact on total emissions is ambiguous.

Keywords: myopia; differential games; transboundary pollution (search for similar items in EconPapers)
JEL-codes: C73 D90 Q59 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:mtl:montec:06-2012

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