Transboundary Watershed Pollution Control and Product Market Competition With Ecological Compensation and Emission Tax: A Dynamic Analysis

Abstract Product competition and pollution control are closely related to watershed environmental management, but existing literature rarely investigates them in an identical framework. Therefore, this paper develops a multiple differential game model to analyze product market competition and ecological compensation games between watershed regions based on the assumption that a region can choose four strategies to regulate its manufacturers while cooperating with other regions in the basin. Then, solve the model and obtain a simultaneous equilibrium between the governments and manufacturers for the first time. The results show that: the combination of emissions tax and ecological compensation results in the highest social welfare and water ecology for all regions in a basin. Furthermore, the ecological compensation rate independent of emissions tax policy and ecological compensation does not shift investment from downstream to upstream, but it can induce the upstream region to increase investment in management. In addition, if the governments impose an emissions tax, manufacturers' output in both regions decreases, and the upstream region is higher than in the downstream region.

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Dynamic Optimal Control Differential Game of Ecological Compensation for Multipollutant Transboundary Pollution

Complexity ◽

10.1155/2021/5530971 ◽

2021 ◽

Vol 2021 ◽

pp. 1-15

Author(s):

Zhigang Chen ◽

Qianyue Meng ◽

Huichuan Wang ◽

Rongwei Xu ◽

Yongxi Yi ◽

...

Keyword(s):

Differential Game ◽

River Basin ◽

Pollution Control ◽

Transboundary Pollution ◽

Upstream Region ◽

Green Innovation ◽

Ecological Compensation ◽

Stackelberg Differential Game ◽

Downstream Region ◽

Compensation Rate

This paper studies a Stackelberg differential game between an upstream region and a downstream region for transboundary pollution control and ecological compensation in a river basin and increases the number of pollutants assumed in the model to multiple. Emission and green innovation investment between upstream and downstream regions in the same basin is a Stackelberg game, and the downstream region provides economic compensation for green innovation investment in the upstream region. The results show that there is an optimal ecological compensation rate, and a Pareto improvement result can be obtained by implementing ecological compensation. Increasing the proportion of ecological compensation can improve the nonvirtuous chain reaction between green innovation investment cost, pollutant transfer rate, and ecological compensation rate. Therefore, it is necessary to establish a joint mechanism composed of the government and the market and formulate a reasonable green innovation subsidy scheme according to the actual situation of the basin, so as to restrict the emergence of this “individual rational” behavior. For river basin areas that can establish a unified management department and organize the implementation of decision-making, the cooperative game is a very effective pollution control decision.

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A Differential Game of Transboundary Pollution Control and Ecological Compensation in a River Basin

Complexity ◽

10.1155/2020/6750805 ◽

2020 ◽

Vol 2020 ◽

pp. 1-13 ◽

Cited By ~ 1

Author(s):

Yongxi Yi ◽

Zhongjun Wei ◽

Chunyan Fu

Keyword(s):

Differential Game ◽

River Basin ◽

Pollution Control ◽

Learning By Doing ◽

Upstream Region ◽

Ecological Compensation ◽

Investment Activity ◽

Downstream Region ◽

Investment Level ◽

Compensation Rate

This paper investigates a Stackelberg differential game between an upstream region and a downstream region for transboundary pollution control and ecological compensation (EC) in a river basin. Among them, the downstream region as the leader chooses its abatement investment level and an ecological compensation rate to encourage upstream investing in water pollution control firstly. After then, the upstream region as the follower determines its abatement investment level to maximize welfare. FFurthermore, we take into consideration the effects of efficiency-improving and cost-reducing learning by doing which are originated from abatement investment activity of both regions simultaneously. The results show the following. (i) There is an optimal ecological compensation rate and under which a Pareto improvement result can be obtained. (ii) Carrying out EC will shift some abatement investment from the downstream region into the upstream region. (iii) The efficiency-improving and cost-reducing learning by doing derived from abatement investment activity of both regions can decrease the optimal ecological compensation rate, increase abatement investment,and improve the social welfare.

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