Essays in Environmental Economics

This dissertation comprises four essays on the topic of environmental economics and industrial organization. In the first essay, we develop a two-country world differential game model with a polluting firm in each country to investigate the equilibrium of the game between firms when they decide to trade or not and to see under which conditions social welfare coincides with the market equilibrium. In the second essay, we built a model where firms strategically choose whether to participate in an auction/lottery to attain pollution permits, or instead invest in green R&D, to show that, somewhat counterintuitively, a desirable side effect of the auction is in fact that of fostering environmental R&D in an admissible range of the model parameters. The third essay investigates a second-best trade agreement between two countries when pollution spillovers are asymmetric to examine the strategic behavior of governments in using pollution taxes and tariffs under trade liberalization. The fouth essay studies the profitability of exogenous output constraint in a differential game model with price dynamics under the feedback strategies.

Essays in Industrial Organization

This dissertation comprises four essays on the topic of industrial organization and environmental economics. The first essay investigates the profitability of horizontal mergers of firms with price adjustments. We take a differential game approach and both the open-loop as well as the closed-loop equlibria are considered. In the second essay, using the same approach as the first one, we study the profitability of horizontal merger of firms where the demand function is nonlinear. We take into consideration the open-loop equilibrium. The third essay studies the profitability of exogenous output constraint in a differential game model with price dynamics under the feedback strategies. The fourth essay investigates a second-best trade agreement between two countries when pollution spillovers are asymmetric to examine the strategic behavior of governments in using pollution taxes and tariffs under trade liberalization.