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Transboundary pollution control in asymmetric countries: do assistant investments help?

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Abstract

Transboundary pollution control usually requires the cooperation of neighboring countries due to the externality of pollution. However, countries at different levels of development, which are called asymmetric countries in this paper, may have different attitudes toward this cooperation. The developing countries would like to take a free ride and they can benefit from the cooperation with developed countries, but the developed countries may not be willing to afford this cooperation cost. This paper discusses the cooperation between two asymmetric countries that developed country may provide assistant investments to help the developing country reduce pollution stock. We consider a dynamic differential game to model the transboundary pollution control between two asymmetric regions and derive the optimal equilibrium of both regions using the Hamilton–Jacobi–Bellman (HJB) equation. To explore the impact of assistant investments, numerical illustrations and sensitivity analysis are implemented to compare the equilibrium strategies under two scenarios: that with or without assistant investments. We conclude that the common pollution stock will be reduced when the developed country is willing to provide assistant investments to the developing country. Besides, the equilibrium emission strategies of both countries increase with assistant investments, which means more economic benefits for both sides.

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Funding

We appreciate the help of Professor Georges Zaccour for the personal communication. This research was funded by the Six Talent Peaks Project in Jiangsu Province (JY-095), the National Natural Science Foundation of China (71704066), National Natural Science Foundation of China (11971202), and Outstanding Young Foundation of Jiangsu Province (BK20200042).

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Authors and Affiliations

  1. School of Management, Jiangsu University, Zhenjiang, China

    Lu Xiao

  2. School of Management, Jiangsu University, Zhenjiang, China

    Ya Chen

  3. School of Mathematical Science, Jiangsu University, Zhenjiang, 212013, China

    Chaojie Wang

  4. Institute of Applied System Analysis, Jiangsu University, Zhenjiang, China

    Jun Wang

Authors
  1. Lu Xiao
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  2. Ya Chen
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  3. Chaojie Wang
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  4. Jun Wang
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Contributions

Conceptualization and literature review: L. Xiao. Methodology: C. Wang and J. Wang. Calculation and simulation: Y. Chen. Writing—original draft: L. Xiao and Y. Chen. Writing—review and editing: C. Wang. All authors read and approved this version.

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Correspondence to Chaojie Wang.

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Xiao, L., Chen, Y., Wang, C. et al. Transboundary pollution control in asymmetric countries: do assistant investments help? . Environ Sci Pollut Res 29, 8323–8333 (2022). https://doi.org/10.1007/s11356-021-16112-6

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