A note on cooperative versus non-cooperative strategies in international pollution control

In this note, we evaluate the scope of Dockner and Long’s [Journal of Environment Economics and Management 24 (1993) 13] conclusion on the efficiency of the non-cooperative outcome in a differential game of international pollution control. We also complete the study of the different equilibria the differential game can present. Our results show that their conclusion requires that the initial value of the stock of pollution be higher than the Pareto-efficient pollution stock so that the equilibrium path of emissions involves a decreasing stock of pollution. Our results also show that the application of the procedure proposed by Tsutsui and Mino [Journal of Economic Theory 52 (1990) 136] to construct a Markov-perfect equilibrium using non-linear strategies is problematic when the initial pollution stock is lower than the Pareto-efficient pollution stock.