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Optimal Timing to Adopt an Environmental Policy in a Strategic Framework

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Abstract

In this paper, the problem of optimal timing, when to adopt an environmental policy in a strategic framework is considered. Using real options theory and some basic tools of game theory, we show that, under certain assumptions, a country behaving strategically should wait longer before adopting such a policy than if it behaves unstrategically or within a larger entity. Such a postponed decision is sub-optimal as regards to the environment protection.

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Authors and Affiliations

  1. London School of Economics, Department of Statistics, Houghton Street, London, WC2A2AE, UK

    Pauline Barrieu

  2. Swiss Banking Institute, University of Zurich, Plattenstrasse 14, 8032, Zurich, Switzerland

    Marc Chesney

Authors
  1. Pauline Barrieu
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  2. Marc Chesney
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Barrieu, P., Chesney, M. Optimal Timing to Adopt an Environmental Policy in a Strategic Framework. Environmental Modeling & Assessment 8, 149–163 (2003). https://doi.org/10.1023/A:1025539106213

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  • DOI: https://doi.org/10.1023/A:1025539106213

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