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Carbon capture and storage and transboundary pollution: A differential game approach

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  • Bertinelli, Luisito
  • Camacho, Carmen
  • Zou, Benteng
Abstract
We study the strategic behavior of two countries facing transboundary CO2 pollution under a differential game setting. In our model, the reduction of CO2 concentration occurs through the carbon capture and storage process, rather than through the adoption of cleaner technologies. Furthermore, we first provide the explicit short-run dynamics for this dynamic game with symmetric open-loop and a special Markovian Nash strategy. Then, we compare these strategies at the games’ steady states and along some balanced growth paths. Our results show that if the initial level of CO2 is relatively high, state dependent emissions reductions can lead to higher overall environmental quality, hence, feedback strategy leads to less social waste.

Suggested Citation

  • Bertinelli, Luisito & Camacho, Carmen & Zou, Benteng, 2014. "Carbon capture and storage and transboundary pollution: A differential game approach," European Journal of Operational Research, Elsevier, vol. 237(2), pages 721-728.
    • Handle: RePEc:eee:ejores:v:237:y:2014:i:2:p:721-728
    DOI: 10.1016/j.ejor.2014.02.025
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    More about this item

    Keywords

    Transboundary pollution; Carbon capture and storage; Differential game;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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