[{"file_date_updated":"2019-09-06T09:19:00Z","ddc":["330"],"status":"public","intvolume":" 586","user_id":"89573","has_accepted_license":"1","page":"26","locked":"1","oa":1,"urn":"urn:nbn:de:0070-pub-29304132","publication_status":"published","series_title":"Center for Mathematical Economics Working Papers","language":[{"iso":"eng"}],"place":"Bielefeld","type":"working_paper","publisher":"Center for Mathematical Economics","author":[{"full_name":"Ferrari, Giorgio","id":"32701753","first_name":"Giorgio","last_name":"Ferrari"},{"first_name":"Torben","last_name":"Koch","full_name":"Koch, Torben","id":"63940079"}],"keyword":["pollution","stochastic impulse nonzero-sum game","verication theorem","diffusions"],"file":[{"file_size":664289,"file_name":"IMW_working_paper_586.pdf","file_id":"2930415","content_type":"application/pdf","date_updated":"2019-09-06T09:19:00Z","creator":"weingarten","relation":"main_file","checksum":"b4a467a794aa3f0a353b25a6728c31eb","access_level":"open_access","date_created":"2018-08-15T11:56:58Z"}],"abstract":[{"lang":"eng","text":"This paper proposes a strategic model of pollution control. A firm, representative\r\nof the productive sector of a country, aims at maximizing its profits by expanding its production.\r\nAssuming that the output of production is proportional to the level of pollutants' emissions, the\r\nfirm increases the level of pollution. The government of the country aims at minimizing the social\r\ncosts due to the pollution, and introduces regulatory constraints on the emissions' level, which\r\nthen effectively cap the output of production. Supposing that the firm and the government face\r\nboth proportional and fixed costs in order to adopt their policies, we model the previous problem\r\nas a stochastic impulse two-person nonzero-sum game. The state variable of the game is the level\r\nof the output of production which evolves as a general linearly controlled one-dimensional ItÃ´-diffusion. Following an educated guess, we first construct a pair of candidate equilibrium policies\r\nand of corresponding equilibrium values, and we then provide a set of sufficient conditions under\r\nwhich they indeed realize an equilibrium. Our results are complemented by a numerical study\r\nwhen the (uncontrolled) output of production evolves as a geometric Brownian motion, and\r\nthe firm's operating prot and the government's running cost functions are of power type. An\r\nanalysis of the dependency of the equilibrium policies and values on the model parameters yields\r\ninteresting new behaviors that we explain as a consequence of the strategic interaction between\r\nthe firm and the government. "}],"volume":586,"publication_identifier":{"issn":["0931-6558"]},"jel":["C61","C73","Q52"],"year":"2017","title":"On a Strategic Model of Pollution Control ","date_updated":"2018-12-10T11:00:19Z","department":[{"_id":"10053"}],"date_created":"2018-08-15T12:02:55Z","_id":"2930413","citation":{"ieee":" G. Ferrari and T. Koch, *On a Strategic Model of Pollution Control *, Center for Mathematical Economics Working Papers, vol. 586, Bielefeld: Center for Mathematical Economics, 2017.","apa_indent":"Ferrari, G., & Koch, T. (2017). *On a Strategic Model of Pollution Control * (Center for Mathematical Economics Working Papers, 586). Bielefeld: Center for Mathematical Economics.

","mla":"Ferrari, Giorgio, and Koch, Torben. *On a Strategic Model of Pollution Control *. Bielefeld: Center for Mathematical Economics, 2017. Center for Mathematical Economics Working Papers. 586.","harvard1":"Ferrari, G., & Koch, T., 2017. *On a Strategic Model of Pollution Control *, Center for Mathematical Economics Working Papers, no.586, Bielefeld: Center for Mathematical Economics.","wels":"Ferrari, G.; Koch, T. (2017): On a Strategic Model of Pollution Control . Bielefeld: Center for Mathematical Economics.","apa":"Ferrari, G., & Koch, T. (2017). *On a Strategic Model of Pollution Control * (Center for Mathematical Economics Working Papers, 586). Bielefeld: Center for Mathematical Economics.","ama":"Ferrari G, Koch T. *On a Strategic Model of Pollution Control *. Center for Mathematical Economics Working Papers. Vol 586. Bielefeld: Center for Mathematical Economics; 2017.","angewandte-chemie":"G. Ferrari, and T. Koch, *On a Strategic Model of Pollution Control *, Center For Mathematical Economics, Bielefeld, **2017**.","bio1":"Ferrari G, Koch T (2017)

*On a Strategic Model of Pollution Control *. Center for Mathematical Economics Working Papers; 586.

Bielefeld: Center for Mathematical Economics.","lncs":" Ferrari, G., Koch, T.: On a Strategic Model of Pollution Control . Center for Mathematical Economics Working Papers, 586. Center for Mathematical Economics, Bielefeld (2017).","frontiers":"Ferrari, G., and Koch, T. (2017). On a Strategic Model of Pollution Control . *Center for Mathematical Economics Working Papers*, 586, Bielefeld: Center for Mathematical Economics.","default":"Ferrari G, Koch T (2017) Center for Mathematical Economics Working Papers; 586.

Bielefeld: Center for Mathematical Economics.","chicago":"Ferrari, Giorgio, and Koch, Torben. 2017. *On a Strategic Model of Pollution Control *. Vol. 586. Center for Mathematical Economics Working Papers. Bielefeld: Center for Mathematical Economics.

","dgps":"Ferrari, G. & Koch, T. (2017). *On a Strategic Model of Pollution Control * (Center for Mathematical Economics Working Papers). Bielefeld: Center for Mathematical Economics.

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