| Article ID: | iaor20083146 |
| Country: | Netherlands |
| Volume: | 37 |
| Issue: | 1 |
| Start Page Number: | 297 |
| End Page Number: | 311 |
| Publication Date: | Dec 1992 |
| Journal: | Annals of Operations Research |
| Authors: | Yeung David |
| Keywords: | game theory |
This paper explores a differential game between a policy maker and a profit maximizing entrepreneur in which production generates pollution. The government levies a pollution tax on output and uses the tax received for pollution abatement. The entrepreneur determines the level of output. A feedback Nash equilibrium is derived. Using more specific functional forms, the game is extended to cover the multiple firm case.