A differential game is the natural framework of analysis for many problems in environmental economics. This chapter focuses on the game of international pollution control, and more specifically on the game of climate change with one global stock of pollutants. The chapter has two main themes. First, the different non-cooperative Nash equilibria (open-loop, feedback, linear, non-linear) are derived. In order to assess efficiency, the steady…
Publication Keyword: Differential games
Feedback Nash Equilibria for Non-linear Differential Games in Pollution Control
Dynamic problems of pollution and resource management with stock externalities often require a differential games framework of analysis. In addition they are represented realistically by non-linear transition equations. However, feedback Nash equilibrium (FBNE) solutions, which are the desired ones in this case, are difficult to obtain in problems with nonlinear- quadratic structure. We develop a method to obtain numerically non-linear FBNE for a class of…
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