Group for Research in Decision Analysis


Side Payments in a Dynamic Game of Environmental Policy Coordination

We consider the problem of defining a fair sharing of the total advantages gained by two regions (players) which decide to coordinate their environmental policies. Several decomposition schemes over time of the total side payment, obtained by comparing the cooperative and noncooperative solutions of welfare maximization, are proposed. The model is especially relevant for the case of unidirectional pollution.

, 20 pages