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Article

Coordinating Carbon Emissions via Production Quantities: A Differential Game Approach

1
The Graduate School of Business Administration, Bar-Ilan University, Ramat Gan 5290002, Israel
2
Department of Industrial Engineering and Management, ORT Braude College, Karmiel 2161002, Israel
*
Author to whom correspondence should be addressed.
Academic Editor: Giovanna Bimonte
Received: 17 December 2020 / Revised: 19 January 2021 / Accepted: 21 January 2021 / Published: 3 February 2021
(This article belongs to the Special Issue Cooperation, Innovation and Safeguarding of the Environment)
Production emissions in the industrial sector are a major source of environmental pollution. In this paper, we explore how emission considerations are integrated with production decisions. We develop a dynamic model consisting of two firms located in the same industrial park, which satisfies exogenously given demands in separate markets. The two firms can build up or rundown stocks (full backlogging), both of which are costly. The emission cost depends on the total output of the two firms. We develop Nash equilibrium feedback strategies, where each firm decides on its output based on its inventory or the inventories of both. We also develop a social planning solution where decisions are centralized. We present the analytic results for the total profits in these settings. The results show the benefits of a decentralized approach over a centralized one, provided there is a mechanism for coordination. Finally, emission costs are compared for the various solution concepts. View Full-Text
Keywords: decentralized; centralized; industrial parks; differential games; emission decentralized; centralized; industrial parks; differential games; emission
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MDPI and ACS Style

Fruchter, G.E.; Naseraldin, H. Coordinating Carbon Emissions via Production Quantities: A Differential Game Approach. Games 2021, 12, 15. https://0-doi-org.brum.beds.ac.uk/10.3390/g12010015

AMA Style

Fruchter GE, Naseraldin H. Coordinating Carbon Emissions via Production Quantities: A Differential Game Approach. Games. 2021; 12(1):15. https://0-doi-org.brum.beds.ac.uk/10.3390/g12010015

Chicago/Turabian Style

Fruchter, Gila E., and Hussein Naseraldin. 2021. "Coordinating Carbon Emissions via Production Quantities: A Differential Game Approach" Games 12, no. 1: 15. https://0-doi-org.brum.beds.ac.uk/10.3390/g12010015

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