Modeling the Impact of Environmental Subsidies on Entry and Exit Infrastructure Projects
Environmental subsidy for infrastructure projects is an effective way to solve the current worsening of the environment. To examine how subsidy affects investors to entry and exit the environmental infrastructure projects is a prerequisite for the decision of environmental policy. Different from the existing literature, the option game theory is applied to construct a symmetric duopoly model of investment with entry and exit decisions under uncertainty in this paper. As a result, the relation between entry and exit optimal thresholds and subsidies is shown. Moreover, the equilibrium strategies corresponding subsidies are given.
Zhenyu Du and Chengbin Li
L. Gong and J. Tian, "Modeling the Impact of Environmental Subsidies on Entry and Exit Infrastructure Projects", Advanced Materials Research, Vol. 281, pp. 74-77, 2011