Infinite horizon common interest games with perfect information

We consider infinite horizon common interest games with perfect information. A game is a K-coordination game if each player can decrease other players' payoffs by at most K times his own cost of punishment. The number K represents the degree of commonality of payoffs among the players. The smaller K is, the more interest the players share. A K-coordination game tapers off if the greatest payoff variation conditional on the first t periods of an efficient history converges to 0 at a rate faster than K^−t as t→∞. We show that every subgame perfect equilibrium outcome is efficient in any tapering-off game with perfect information. Applications include asynchronously repeated games, repeated games of extensive form games, asymptotically finite horizon games, and asymptotically pure coordination games.     

How does a firm’s management of greenhouse gas emissions influence its economic performance? Analyzing effects through demand and productivity in Japanese manufacturing firms

This paper analyzes how a firm’s management of greenhouse gas (GHG) emissions affects its economic performance. The theoretical model we derive from Cobb–Douglas production and inverse demand functions predict that in conducting GHG emissions management, a firm will enhance its economic performance because it promotes an increase in demand for its output and improves its productivity. The estimation results, using panel data on Japanese manufacturing firms during the period 2007–2008, support the view that a firm’s GHG emissions management enhances a firm’s economic performance through an increase in demand and improvement in productivity. However, the latter effect is conditional. Although a firm’s efforts to maintain lower GHG emissions improves productivity, efforts to reduce GHG emissions further does not always improve it, especially for energy-intensive firms. Because firms attempting to maintain lower GHG emissions are more likely to improve their productivity, there is a possibility that firms with high GHG emissions can also enhance economic performance by reducing their emissions in the long term, even if additional costs are incurred. In addition, better GHG emissions management increases the demand of environmentally conscious customers because a product’s life cycle GHG emissions in the upper stream of the supply chain influence those in the lower stream, and customers evaluate the suppliers’ GHG emissions management in terms of green supply-chain management.