A Dynamic Game of Emissions Pollution with Uncertainty and Learning

24 Pages Posted: 29 Jul 2014 Last revised: 5 Dec 2014

See all articles by Nahid Masoudi

Nahid Masoudi

Memorial University of Newfoundland (MUN)

Marc Santugini

University of Virginia - Department of Economics

Georges Zaccour

HEC Montreal - Department of Decision Sciences

Date Written: December 4, 2014

Abstract

We introduce learning in a dynamic game of international pollution, with ecological uncertainty. We characterize and compare the feedback non-cooperative emissions strategies of players when the players do not know the distribution of ecological uncertainty but they gain information (learn) about it. We then compare our learning model with the benchmark model of full information, where players know the distribution of ecological uncertainty. We find that uncertainty due to anticipative learning induces a decrease in total emissions, but not necessarily in individual emissions. Further, the effect of structural uncertainty on total and individual emissions depends on the beliefs distribution and bias. Moreover, we obtain that if a player’s beliefs change toward more optimistic views or if she feels that the situation is less risky, then she increases her emissions while others react to this change and decrease their emissions.

Keywords: Pollution Emissions, Dynamic Games, Uncertainty, Learning

JEL Classification: Q50, D83, D81, C73

Suggested Citation

Masoudi, Nahid and Santugini, Marc and Zaccour, Georges, A Dynamic Game of Emissions Pollution with Uncertainty and Learning (December 4, 2014). Available at SSRN: https://ssrn.com/abstract=2472734 or http://dx.doi.org/10.2139/ssrn.2472734

Nahid Masoudi (Contact Author)

Memorial University of Newfoundland (MUN) ( email )

Memorial University of Newfoundland
St. John's
St. John's,, Newfoundland and Labrador A1C 5S7
Canada

Marc Santugini

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States

Georges Zaccour

HEC Montreal - Department of Decision Sciences ( email )

HEC Montreal
3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3 H3T 2A7
Canada

Register to save articles to
your library

Register

Paper statistics

Downloads
78
Abstract Views
456
rank
315,175
PlumX Metrics