Deforestation and foreign transfers: a Stackelberg differential game approach

In this paper, our concern is with deforestation as a global environmental issue. Foreign transfers from developed or Northern countries to developing or Southern countries have been proposed to deal with that issue. We use a Stackelberg differential game approach where the two players are: a donor community (the leader) and a recipient country (the follower). We study the impact of different specifications for the transfer function, related to the different information structures the players can consider when playing the Stackelberg game. The different scenarios are compared both from the environmental and economic points of view.