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Hritonenko, Natali; Hritonenko, Victoria; Yatsenko, Yuri

Games with adaptation and mitigation. (English) Zbl 1457.91284

Games 11, No. 4, Paper No. 60, 16 p. (2020).
Summary: We formulate and study a nonlinear game of \(n\) symmetric countries that produce, pollute, and spend part of their revenue on pollution mitigation and environmental adaptation. The optimal emission, adaptation, and mitigation investments are analyzed in both Nash equilibrium and cooperative cases. Modeling assumptions and outcomes are compared to other publications in this fast-developing area of environmental economics. In particular, our analysis implies that: (a) mitigation is more effective than adaptation in a crowded multi-country world; (b) mitigation increases the effectiveness of adaptation; (c) the optimal ratio between mitigation and adaptation investments in the competitive case is larger for more productive countries and is smaller when more countries are involved in the game.

Cited in 1 Document

MSC:

91B76 Environmental economics (natural resource models, harvesting, pollution, etc.)
91A10 Noncooperative games
91A80 Applications of game theory

Keywords:

economic-environmental model; environmental adaptation; pollution mitigation; Nash equilibrium
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References:

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