IDEAS home Printed from https://ideas.repec.org/a/wsi/igtrxx/v24y2022i01ns021919892050022x.html
   My bibliography  Save this article

Transboundary Pollution Abatement, Emission Permits Trading and Compensation Mechanism: A Differential Game Analysis

Author

Listed:
  • Genlong Guo

    (School of Economics and Management, Shanxi Normal University, Linfen 041004, P. R. China)

  • Huiquan Li

    (��School of Business Administration, South China University of Technology, Guangzhou 510641, P. R. China)

  • Zhaoquan Jian

    (��School of Business Administration, South China University of Technology, Guangzhou 510641, P. R. China)

Abstract

In this paper, we consider a pollution control problem along a river basin where a portion of the pollution emitted by the upstream region can be transferred to the downstream region. Our model has three significant features: first, we take into account the pollution abatement investment, and the stock of pollution abatement capital follows standard differential equation of motion; second, we introduce the emission permits trading system so that each region has the choice between buying pollution permits or pollution abatement investment; third, we consider the pollution compensation mechanism so that the downstream region pays pollution compensation for the upstream region. We explore and compare the optimal decisions of both the upstream and downstream regions under the cases of the cooperative and no-cooperative strategies, respectively. We find that although the flow of emissions can be better controlled by cooperation between the upstream and downstream regions, the pollution abatement investment is not necessarily higher in the cooperative equilibrium. Further, a sensitivity analysis is also conducted on the parameters of the transboundary river basin pollution.

Suggested Citation

  • Genlong Guo & Huiquan Li & Zhaoquan Jian, 2022. "Transboundary Pollution Abatement, Emission Permits Trading and Compensation Mechanism: A Differential Game Analysis," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 24(01), pages 1-25, March.
    • Handle: RePEc:wsi:igtrxx:v:24:y:2022:i:01:n:s021919892050022x
    DOI: 10.1142/S021919892050022X
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S021919892050022X
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S021919892050022X?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:igtrxx:v:24:y:2022:i:01:n:s021919892050022x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/igtr/igtr.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.