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Open AccessArticle

Optimal Coordination Strategy for International Production Planning and Pollution Abating under Cap-and-Trade Regulations

by Baogui Xin 1,*, Wei Peng 1,* and Minghe Sun 2,*
1
Nonlinear Science Center, College of Economics and Management, Shandong University of Science and Technology, Qingdao 266590, China
2
Department of Management Science and Statistics, College of Business, The University of Texas at San Antonio, San Antonio, TX 78249-0634, USA
*
Authors to whom correspondence should be addressed.
Int. J. Environ. Res. Public Health 2019, 16(18), 3490; https://doi.org/10.3390/ijerph16183490
Received: 27 August 2019 / Revised: 15 September 2019 / Accepted: 16 September 2019 / Published: 19 September 2019
(This article belongs to the Section Environmental Science and Engineering)
Because both pollution emissions and production policies often are international in scope, it is necessary to find optimal coordination strategies for international production planning and pollution abating. Differential game models are developed for multiple neighboring countries to reach optimal decisions on their production planning and pollution abating under cap-and-trade regulations. Non-cooperative and cooperative differential games are presented to depict the optimal tradeoffs between production planning and pollution abating. Hamilton-Jacobi-Bellman (HJB) equations are then employed to analyze the asymmetric and symmetric feedback solutions. Numerical simulations are used to illustrate the results. Five different dividends are also discussed. With the proposed strategies, more improvement will be directed toward production supplies and environmental issues than ever before. View Full-Text
Keywords: optimal coordination strategy; carbon emission; production plan; pollution abatement; differential game optimal coordination strategy; carbon emission; production plan; pollution abatement; differential game
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Xin, B.; Peng, W.; Sun, M. Optimal Coordination Strategy for International Production Planning and Pollution Abating under Cap-and-Trade Regulations. Int. J. Environ. Res. Public Health 2019, 16, 3490.

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