Modeling the Impact of Environmental Subsidies on Entry and Exit Infrastructure Projects

Li Gong; Jin Tian

doi:10.4028/www.scientific.net/AMR.281.74

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HomeAdvanced Materials ResearchAdvanced Materials Research Vol. 281Modeling the Impact of Environmental Subsidies on...

Modeling the Impact of Environmental Subsidies on Entry and Exit Infrastructure Projects

Abstract:

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.

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Periodical:

Advanced Materials Research (Volume 281)

Pages:

74-77

DOI:

https://doi.org/10.4028/www.scientific.net/AMR.281.74

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Online since:

July 2011

Authors:

Li Gong, Jin Tian

Keywords:

Entry and Exit, Environmental Subsidies, Game Option

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