Consistency and optimality in a dynamic game of pollution control II: Monopoly

This paper continues a line of research begun in Batabyal (1995a). I model the interaction between a regulator and a monopolistic, polluting firm as a Stackelberg differential game in which the regulator leads. The firm creates pollution, which results in a stock externality. I analyze the intertemporal effects of alternate pollution control measures. The principal issue here concerns the dynamic inconsistency of the optimal solution. Inter alia, I compare the steady state levels of pollution under optimal and under dynamically consistent policies.     

An alternate approach to modeling the slack season provision of guided tours to tourists

We discuss an approach to modeling the slack season provision of guided tours to tourists that accounts for the twin phenomena of stochastic demand and tourist heterogeneity but is different from the way in which this problem has been modeled in the extant tourism literature. Our discussion uses the theory of discrete-time Markov chains and it models the slack season from a tourist demand perspective. Specifically, we first study a case in which the wait plus tour or the excursion time of an arriving tourist is exponentially distributed with a fixed mean. Next, we focus on a scenario in which the excursion time is exponentially distributed with one of two possible fixed means and these two means arise with specific probabilities.     

Developing Countries and Environmental Protection: Contract Design in Perfectly Correlated Environments

I study the problem faced by an asymmetrically informed supranational governmental authority (SNGA) with limited funds that wishes to design an international environmental agreement (IEA) for less developed countries (LDCs). The SNGA cannot contract directly with polluting firms in the various LDCs, but it must deal with such firms through their national governments. I study this tripartite hierarchical interaction for two LDCs. My principal result is that despite the perfect correlation in the private information of the governments and the firms across the two countries, and in contrast with the result contained in Batabyal (1998a), the SNGA cannot implement a first-best IEA.     

Environmental Policy in Developing Countries: A Dynamic Analysis

A dynamic model is constructed of the environmental policy formulation process in a stylized developing country (DC). The paper analyzes the employment and output effects of three pollution control policies. These policies embody different assumptions about the DC government's ability to commit to its announced course of action. The timepath of the government's policy variable is characterized. Optimality calls for an activist policy, irrespective of the length of time to which the government can commit to its announced policy. However, the effects of this activist policy depend fundamentally on the government's period of commitment.     

On the design of international environmental agreements for identical and heterogeneous developing countries

I analyze the problem faced by an imperfectly informed supra-nationalgovernmental authority (SNGA) that wishes to design an InternationalEnvironmental Agreement (IEA). The SNGA cannot contract directlywith polluting firms in the developing countries (DCs), andit must deal with such firms through their governments. I findthat the transfers necessary to induce optimal behavior by governmentsand firms are sensitive to the timing of the underlying gameand to the existence of collusion. This analysis suggests thatIEAs are not doomed due to a monitoring and enforcement problemarising from national sovereignty. However, the success of IEAsis contingent on the funds available for environmental protection.     

Corruption, Bribery, and Wait Times in the Public Allocation of Goods in Developing Countries

What are the nexuses between corruption, bribery, and wait times in the public allocation of goods in developing countries? This question has received scant attention in the literature. Consequently, we use queuing theory to analyze models in which a good is allocated publicly, first in a non‐preemptive corruption regime and then in a preemptive corruption regime. Specifically, for both regimes, we calculate wait times for citizens who pay bribes and for those who do not. Second, we use these wait times to show that bribery is profitable for citizens with a high opportunity cost of time. Third, we show that high and low opportunity cost of time citizens will have dissimilar preferences as far as the corruption regime is concerned. Finally, we conclude with some across‐citizens and across‐corruption regimes observations about the value of preemption, the benefit from bribery, and a measure of resource misallocation in the economy.     

A Game Model of New and Remanufactured Goods,Brown and Green Consumers,and Market Share Dominance

Journal of Quantitative Economics - The n total consumers in the market for a particular good are made up of b brown and g green consumers so that $$b+g=n$$ . The b brown (g green) consumers are...