The economics of transboundary air pollution in Europe

Acid rain is causing substantial damage in all Eastern and Western European countries. This article presents a stepwise linear optimisation model, that places transboundary air pollution by SO₂ and NO_x in a game theoretical framework. The national authorities of 28 countries are perceived as players in a game in which they can choose optimal strategies. It is illustrated that optimal national abatement programmes may be far from optimal if considered from an international point of view. Several scenarios are discussed, including a reference case, full cooperation, Pareto optimality and a critical loads approach. The need for international cooperation and regional differentiation of abatement programmes is emphasised.