Domestic environmental policy and international cooperation for global commons |
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Institution: | 1. Department of Economics, Hiroshima University, 1-2-1 Kagamiyama, Higashi-Hiroshima 739-8525, Japan;2. Graduate School for International Development and Cooperation, Hiroshima University, 1-5-1 Kagamiyama, Higashi-Hiroshima 739-8529, Japan |
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Abstract: | The paper analyzes the strategic behavior of several countries engaged in capital accumulation, pollution mitigation, and environmental adaptation in the context of an environmental common good. Both cooperative and non-cooperative strategies are discussed. The non-cooperative strategy is a dynamic game in which each country makes its own environmental decision following the open-loop Nash equilibrium. The cooperative social planner problem assumes an international environmental agreement in force. The non-cooperative and cooperative solutions are compared in the symmetric case of two countries and extended to several identical countries. It is shown that the non-cooperative strategy in multi-country world leads to over-production, over-consumption, over-pollution, and over-adaptation. |
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Keywords: | Climate policy Adaptation Mitigation Social planner problem Dynamic games |
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