E. Allevi, A. Gnudi, I. V. Konnov, G. Oggioni
We consider the general problem of industrial production in a set of countries subject to a common environmental regulation that limits the emissions of specific sectors. Due to these restrictions, the problem is treated as a generalized non-cooperative game where players (countries) have joint (environmental) constraints caused by the necessity of a common and compulsory emission regulation. The problem is to find a natural mechanism for attaining the corresponding generalized equilibrium state. We suggest a share allocation method, which yields a suitable decomposition type procedure and replaces the initial problem with a sequence of usual non-cooperative games on Cartesian product sets. We also show that its implementation can be simplified essentially after application of a regularized penalty method. In the case study, we consider the application of the European Union Emission Trading System (EU-ETS) that restricts the carbon emissions of specific industrial sectors.
Keywords: Oligopolistic competition; pollution regulation; non-cooperative games; generalized equilibrium points; share allocation method; regularized penalty method.
Scheduled
WE2 Game Theory and equilibrium models
June 1, 2016 4:30 PM
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