Publication: Controlling the international stock pollutant with policies depending on target values
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2009-09
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Abstract
In this paper a stochastic dynamic game formulation of the economics of international
environmental agreements on the transnational pollution control, when the
environmental damage arises from stock pollutant that accumulates, for accumulating
pollutants such as CO2 in the atmosphere is provided. To improve the non-cooperative
equilibrium among countries, we propose a different criterion to the minimization of the
expected discounted total cost. Moreover, we consider Cooperative versus Noncooperative
Stochastic Dynamic Games formulated as Markov Decision Processes
(MDP). We propose a new alternative where the decision-maker wants to maximize the
probability that some total performance of the dynamical game does not exceed a target
value during a fixed period of time. The task requirements are therefore formulated as
probabilities rather than expectations. This approach is different from the standard
MDP, which uses performance criteria based on the expected value of some index. We
present properties of the optimal policies obtained under this new perspective.
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Stochastic optimal control, Markov Decision Processes, Stochastic Dynamic Programming, Stochastic Dynamic Games, International pollutant control, Environmental economics, Sustainability, Probability criterion