A stochastic model for the environmental transnational pollution control problem
Article first published online: 22 MAR 2011
Copyright © 2011 John Wiley & Sons, Ltd.
Volume 22, Issue 4, pages 541–552, June 2011
How to Cite
Casas, O. J. and Romera, R. (2011), A stochastic model for the environmental transnational pollution control problem. Environmetrics, 22: 541–552. doi: 10.1002/env.1084
- Issue published online: 5 MAY 2011
- Article first published online: 22 MAR 2011
- Manuscript Accepted: 27 SEP 2010
- Manuscript Revised: 23 SEP 2010
- Manuscript Received: 31 MAR 2010
- environmental pollutant control;
- stochastic dynamic games;
- optimal abatement policies
In this paper, we provide a stochastic dynamic game formulation of the transnational pollution control problem when environmental damage arises from accumulation in the atmosphere of stock pollutants, such as CO2. With a few exceptions, dynamic games in the literature on this problem have been developed in a deterministic framework. We propose a stochastic dynamic model where the inherent uncertainty of the cumulated stock pollutant's evolution due to environmental and meteorological factors is considered. We calculate the optimal path of abatement as the solution of the stochastic game for both cooperative and non-cooperative behavior of the countries. The optimality criteria assumed in our setting is the minimization of the expected discounted total cost. To illustrate our model, we present some numerical results based on real scenarios for six different regions. Copyright © 2011 John Wiley & Sons, Ltd.