Pollution reduction policies under uncertainty and their costs
نویسنده
چکیده
In this paper, we investigate pollutant reduction policies under uncertainty. We assume that when an agent reduces quantity of a pollutant, it incurs costs. We consider two kinds of policies distinguished by their costs. One policy incurs proportional reduction cost (Case 1) and the other incurs fixed and proportional reduction costs (Case 2). To solve these problems, we formulate the agent’s problems as a singular stochastic control problem in Case 1 and a stochastic impulse control problem in Case 2, respectively. Using this analysis, we show optimal pollutant reduction policies. Furthermore, we present numerical analysis.
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