The Application Of Game Theory In Environment Pollution

Until recently, the study of environmental economics and its management strategy has been at the beginning stage in China. However, study of this field is becoming more and more necessary according to the worsening environmental situation in our country. Game theory is about the management. Now, many papers use the game theory to solve environment problems, most of which are qualitative analysis. In this paper we try to do some quantitative analysis to problems of environmental pollution, that is, analysis based on mathematic formula.Several environment problems have international dimensions because their impact cannot be confined to the country of origin. This attribute is most obvious in the case of global environmental problems, such as ozone depletion and transboundary pollution. This interdependency implies that coordination among the countries involved is necessary for effective solutions to these environmental problems. However, essential feature of these problems is the absence of an institution with the international jurisdiction to enforce agreement. Cooperation may not profit every country, some country may be made worse off by the agreement and will therefore choose to not participate. Even if every country's total net benefit is positive, it may be more profitable to behave as a free rider rather than to participate in the agreement.In response to the dilemma of negative net benefits it is often suggested that countries who receive positive net benefits if the agreement is concluded may provide incentives in the form of financial side payments to those whose net benefit would otherwise be negative.First of all, this paper introduce the knowledge of environmental economics and game theory. By means of propose an environment supervising model, we find the combination of environmental economics and game theory. Then this paper propose a game model about transboundary pollution, in which there are two situations—cooperation and non-cooperation. By solving the model we get two results related to two situations. We get an important conclusion by comparing two results: cooperation is an effective way to solve transboundary pollution. Meanwhile economic compensation is an effective supplement to cooperation. We can use interconnected game model to prove the above point, which is an uncompleted job.At last, this paper propose a game model of pollution under the condition of duopoly, and we get the Nash equilibrium solution by solving the reaction function. By analyzing the solution we can get an important conclusion: Raising pollution charge can make several technology-leading enterprises get more market and can prevent the Duopoly alliance.