Environmental quality control and environmental games

Abstract

This paper is concerned with the problem of an environmental "regulator" and a potentially "polluting firm" who uses a pollution technology, expressed by the propensity to pollute. Pollution risks, measured by their consequences are, however, a function of the regulators detection of polluting events. An event which is not detected is costless to the firm but costly to "society" faced with cleaning the environment while a detected polluting event induces a cost borne by both the firm and "society"-costs assumed shared in some fashion. Using a game theory framework we determine an endogenous pollution probability and an environmental control policy. Issues regarding investment in preventive measures, environmental controls and the likes are then assessed. The problems that both the polluting firm and the regulator are faced with are then two-fold: (1) given a polluting technology and a shared penalty cost when a polluting event occurs, what are the control effort to exercise by the firm and what controls and preventive efforts should the firm apply and (2) what are the effects of the technology choice and penalty-cost sharing parameters on the firm and society's payoffs. These problems lead to a random payoffs environmental game which we solve by assuming first risk neutrality and subsequently by assuming a quadratic (risk aversion) utility function for both the polluting firm and the environmental regulator.

Key stakeholders' optimal strategy for upgrading water supply facilities in China

“…However, this research provides interesting implications of these policies for governments and for water companies to choose different strategies regarding water supply facilities based on a game theoretical model. In agreement with other authors (Tapiero, 2004(Tapiero, , 2005Zhao et al, 2012), this study confirms that penalty is a useful incentive measure to promote upgrading of water supply facilities. This implies that all water companies are obliged to internalize the costs of treatment required to fulfill the standards for drinking-water quality under the threat of suffering sanctions that range from fines to judicial penalties (at the limit, forbidding activities and arresting the responsible people).…”

“…Yet game theory applications to water supply management are still under development (Suttinon et al, 2012). Tapiero (2004) created a game theory framework to investigate governmental subsidies and penalties which can influence the possible actions of enterprises. Later, the model was modified by formulating a Stackelberg game where the polluting firm is assumed to be a follower, while the environmental agency is a leader (Tapiero, 2005).…”

A New Mathematical Approach in Environmental and Life Sciences: Gene–Environment Networks and Their Dynamics

“…also [79]), eco-efficiency in logistics networks [74], the understanding of community structures [19], aspects of lifestyle and awareness, the sustainable development of our societies [36], and educational measurements as well. Socio-econo-environment networks can become an expression of such an extension, which might be called "soft" today but can be in the range and service of applied mathematics tomorrow.…”

When Does Compromise Prevent More Pollution?

“…Recent studies of similar situations have opted to simplify the number of varying factors while adding realistic complexity to their treatment of the passage of time. In [7] Tapiero considers a very similar game; to his model we add the factor δ (effectiveness of the controls) and the variable Pigouvian penalties. In [8] the same author considers the game in a queueing framework.…”