A Multigenerational Game Model to Analyze Sustainable Development |
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Authors: | Email author" target="_blank">Alain?HaurieEmail author |
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Institution: | (1) Department of Management Studies, University of Geneva, 1211 Geneva, Switzerland |
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Abstract: | This paper deals with a multigeneration game that provides a new rationale for representing time preference in very long term
cost benefit analysis, as it happens typically in the economics of global climate change. One defines an intergenerational
game where each generation has a random life duration and transfers the control of the economic system to the next generation
at the end of its life. The payoff to a generation is a discounted sum of the expected consumption by the whole infinite sequence
of generations, starting with the current one. The equilibrium is characterized by a dynamic programming equation; a unique
solution is proved to exist; a numerical technique is proposed and implemented on a continuous time simplified version of
the model DICE94. The results show the influence of this form of altruism on the asymptotic steady states of the economy subject
to a global climate change effect.
This research has been supported by an SNSF grant in the NCCR-Climate research program. |
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Keywords: | discounting intergenerational equity stochastic game intergenerational equilibrium turnpike solutions cost-benefit analysis climate change policies |
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