Game of Pollution Reduction Investment under Uncertainty
We construct a game model of real options in which two countries determine the timing of the investment in pollution reduction as a strategy, and examine how strategic factors affect each countrys investment decision. Investment is assumed to be irreversible and its benefit (a value of damage parameter) is uncertain. We derive a noncooperative Nash equilibrium and a Pareto efficient cooperative solution. The countries become more careful when applying an investment in pollution reduction. However, there is a discrepancy between noncooperative and cooperative solutions, and each countrys investment is delayed by the strategic effect, which shows cooperative relations are essential for efficient reductions of pollution.
Pollution Reduction Uncertainty Irreversible Investment Real Options Game Theory
Toshiyuki FUJITA
Faculty of Economics.Kyushu University,Japan
国际会议
南京
英文
661-669
2008-06-06(万方平台首次上网日期,不代表论文的发表时间)