Full cooperation applied to environmental improvements
Volume 104 / 2015
Banach Center Publications 104 (2015), 121-131
MSC: Primary 93E20; Secondary 60H10.
DOI: 10.4064/bc104-0-6
Abstract
We analyse the case of certificates of environmental improvements and full cooperation of two identical agents. We model pollution levels as geometric Brownian motions with quadratic costs of improvements. Our main result is the construction of the optimal improvements strategy in the case of separate actions, collusive actions and fusion. In certain range of the model parameters, the fusion solution generates lower pollution levels than separate and collusive actions.
