Knowledge spillovers, transboundary pollution, and growth

Trade in natural resources is construed as a dynamic game betweenNorth and South. Policies that promote growth in the North alsocause knowledge spillovers and transboundary pollution in theSouth. Cooperative and noncooperative Nash equilibria of thisstrategic trade game are simulated under various scenarios byparallel genetic algorithms to highlight the distortions inthe growth/pollution trade-off. Absent cooperation, both regionsbenefit when North simultaneously cuts waste and increases knowledgespillovers, impelling South to reciprocate by lower resourceprices.