A Study on Transboundary Pollution Gaming: Considering the Learning-by-Doing Effect in Clean Technology Innovation

In this paper, we develop a differential game model of transboundary pollution which incorporates abatement investments and clean technology innovations under the influence of learning by doing. We consider clean technology as an endogenous variable that can be improved though technology investment, and region’s cost function depends not only on the R&D investment but also influenced on the accumulation of experience. Our focus is on the investment behavior in clean technology and the impact of learning by doing on optimal decisions of the regional. We also study the general solutions of the dynamic systems and discuss the results with numerical examples under both the noncooperative game and the cooperative game. Results show that clean technology innovation and emission reduction experience accumulation can increase the region’s future revenues; the improvement of the learning rate and knowledge accumulation growth rate of clean technology can promote regional’ transformation toward a cleaner mode of production; both regions achieve higher levels of clean technology and lower pollution stocks in cooperative games.