On the optimal management of environmental stock externalities.

Xepapadeas, Anastasios · Proc Natl Acad Sci U S A · 2022

other · Level V

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Abstract

Following a brief review of the management of environmental externalities under strategic interactions in the traditional temporal domain, results are extended to the spatiotemporal domain. Conditions for spatial open-loop and feedback Nash equilibria, along with conditions for the benchmark cooperative solution, are presented and compared. A simplified numerical example illustrates the spatial patterns emerging at a steady state under Fickian diffusion and dispersal kernels, and the inefficiency of spatially flat emission taxes. This conceptual framework could provide new research areas.