Myopic Vs. Foresighted Behaviors In A Transboundary Pollution Game With Abatement Policy And Emission Permits Trading

In this paper,we mainly add the emission trading and emission reduction strategy on the basis of cross boundary pollution issues,and expand the literature [11] to a more general model,in which emission permits trading and abatement policy are taken into consideration,to examine the effect of foresight on the optimal emission levels and optimal abatements in a transboundary industrial pollution game.In our model,a foresighted country chooses strategies to maximize the long-term payoff,while a myopic player ignores the impact of his decisions on the future evolutions of payoff and pollution stock.The Markov equilibrium is calculated by solving the Hamilton-Jacobi-Bellman(HJB)equations corresponding to the two game models.The two sets of results are compared to illustrate the impact of farsighted and myopic effects on the value function,emissions and emission reduction of the two game models.Our results show that the revenues obtained from farsighted behavior are larger than that from myopia,and the total emission of myopic countries is more than the farsighted ones.For a myopic country,the larger the abatement cost coefficients,the smaller willingness to acquire foresight.When a myopic country acquires foresight,the other myopic countries still not implement the abatement,while the farsighted countries should improve their abatement levels.Furthermore,the total emissions will decrease with the increasing abatement cost coefficients and emission permits price.