Optimal Timing to Adopt an Environmental Policy in a Strategic Framework |
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| Authors: | Pauline Barrieu Marc Chesney |
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| Institution: | (1) London School of Economics, Department of Statistics, Houghton Street, London, WC2A2AE, UK;(2) Swiss Banking Institute, University of Zurich, Plattenstrasse 14, 8032 Zurich, Switzerland |
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| Abstract: | In this paper, the problem of optimal timing, when to adopt an environmental policy in a strategic framework is considered. Using real options theory and some basic tools of game theory, we show that, under certain assumptions, a country behaving strategically should wait longer before adopting such a policy than if it behaves unstrategically or within a larger entity. Such a postponed decision is sub-optimal as regards to the environment protection. |
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| Keywords: | real options strategic behaviour optimal timing environmental policy |
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