Open AccessA STEADY‐STATE SATISFACTORY SOLUTION TO AN ENVIRONMENTAL GAME WITH PIECE‐WISE DEFINED PAYOFFS
Author(s) -
Krawczyk Jacek B.,
Pourtallier Odile,
Tidball Mabel
Publication year - 1998
Publication title -
natural resource modeling
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.28
H-Index - 32
eISSN - 1939-7445
pISSN - 0890-8575
DOI - 10.1111/j.1939-7445.1998.tb00313.x
Subject(s) - stochastic game , mathematical economics , nash equilibrium , mathematical optimization , steady state (chemistry) , diagonal , function (biology) , simple (philosophy) , nonlinear system , mathematics , state (computer science) , economics , chemistry , physics , philosophy , geometry , epistemology , algorithm , quantum mechanics , evolutionary biology , biology
We model a pollution accumulation process through a nonlinear, nondifferentiable state equation and also as dependent on an environmental levy. Then the payoff function to an economic agent is defined piece‐wise. However, for a simple demand and cost structure, the combined payoff function of all agents is diagonally strictly concave. This implies that a steady‐state Nash equilibrium is unique and can be controlled by the levy. We analytically compute a steady‐state Nash equilibrium solution for the agents, and use a Decision Support Tool to determine a satisfactory solution for the interactions between the agents and a legislator responsible for the levy.