In this paper we put forward a simple game-theoretical model of pollution control, where each country is in control of … its own pollution, while the environmental effects of policies do not stop at country borders. In our noncooperative … differential game, countries as players minimize the present value of their own costs defined as a linear combination of pollution …

equilibrium. Players are assumed to make strategy choices using a combination of imitation and innovation. We begin by looking at … an imitation dynamic and provide conditions under which play evolves to an imitation equilibrium; convergence is … conditional on the network of social interaction. We then illustrate, through example, how imitation and innovation can complement …

after each period. The evaluation compares predictions derived from imitation equilibrium (Selten and Ostmann 2001) and … Cournot equilibrium, as well as symmetric joint-profit maximization. The results qualitatively favor imitation equilibrium, as … long as no cooperation is observed. …

discrimination (MBD). We show that, for a moderately high imitation cost, both (Strict IPR, Parallel Imports) and (Weak IPR, MBD …) emerge as the Subgame Perfect Nash Equilibrium (SPNE) policy choices. For relatively smaller imitation costs, (Weak IPR, MBD …

long-run and along a dynamic path, and we compare optimal commitment policy under Nash competition and under cooperation … international policy cooperation. …