Incentive equilibrium in an overlapping-generations environmental game |
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Authors: | Michè le Breton,Abderrahmane Sokri,Georges Zaccour |
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Affiliation: | 1. GERAD and CREF, HEC Montréal, Que., Canada;2. GERAD, HEC Montréal, Que., Canada;3. GERAD and Chair in Game Theory and Management, HEC Montréal, Que., Canada |
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Abstract: | We consider two overlapping generations that want to coordinate their strategies of working, consuming and controlling pollution. Since the cooperative solution is not an equilibrium, and hence is not a self-enforcing contract, a mechanism is required to sustain it. We show how incentive strategies, and the resulting incentive equilibrium, could provide such a mechanism. We also derive the conditions that ensure the credibility of these strategies. |
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Keywords: | Overlapping-generations models Environment Incentive strategies Credibility |
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