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A game-theoretic approach for pollution control initiatives

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  • Tajbakhsh, Alireza
  • Hassini, Elkafi

Abstract

There are numerous regional, national, and international efforts to establish mechanisms to curb pollution and emissions. In this paper, we mainly focus on emissions trading systems. Using a static Cournot oligopoly game, we investigate a multi-product multi-pollutant market in which several supply chains compete in a non-cooperative manner in their product markets. This study characterizes conditions under which an efficient solution procedure converges to the unique Nash equilibrium of the oligopoly. Meanwhile, its partners establish a cooperative triopoly game within each supply chain in a nonsuperadditive characteristic function form. Drawing on the cooperative game theory literature, we provide a closed-form solution for a rational distribution of joint rewards between the supply chain’s partners.

Suggested Citation

  • Tajbakhsh, Alireza & Hassini, Elkafi, 2022. "A game-theoretic approach for pollution control initiatives," International Journal of Production Economics, Elsevier, vol. 254(C).
    • Handle: RePEc:eee:proeco:v:254:y:2022:i:c:s092552732200233x
    DOI: 10.1016/j.ijpe.2022.108651
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