Abstract
This paper explores a differential game between a policy maker and a profit maximizing entrepreneur in which production generates pollution. The government levies a pollution tax on output and uses the tax received for pollution abatement. The entrepreneur determines the level of output. A feedback Nash equilibrium is derived. Using more specific functional forms, the game is extended to cover the multiple firm case.
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Yeung, D. A differential game of industrial pollution management. Ann Oper Res 37, 297–311 (1992). https://doi.org/10.1007/BF02071062
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DOI: https://doi.org/10.1007/BF02071062