The first lecture, given by Stéphane Lambrecht (Université de Valenciennes), was on the overlapping generations model. Lambrecht first presented a basic version of the model, then showed methods of its application in analyzing the sustainability of natural resource usage and pollution control. The Diamond model allows us to account for altruistic relations between generations (parents and children) and is thus one of the easiest ways to model how current decision-making on natural resource extraction and environmental protection will influence the decisions of future generations. In addition to standard variables, the overlapping generations model includes equations describing the level of environmental quality/the level of unexhausted natural resources and increasing pollution due to production/the extraction of natural resources. A thorough analysis of the model showed that despite a trade-off between savings on future production capital and costs for environmental preservation, a transition from an unregulated (with thermal pollution) economy to a regulated one is possible—leading to an increase in both capital and environmental quality.
The second lecture, by professor Alain Le Kama (Université Paris Ouest Nanterre La Défense), was on optimal strategies for reducing the consequences of climate change, as well ways to adapt to it. The Ramses model was used as a basis for analyzing the dynamics of environmental quality. In developing the optimal policy for regulating pollution, agents in the corresponding modifications of the Ramses model were faced with the need to allocate costs between mitigating the consequences of climate change and the costs of adapting to these changes (only up to a certain threshold, after which adaptation is no longer effective). The primary results of the analysis showed the existence of a possibility for decreasing environmental pollution in such a way that the irreversible crossing of the effectiveness threshold can be avoided.
The final lecture was given by Fabien Prieur (Laboratory of Theoretical and Applied Economics, Montpellier). Prieur described the concept of game-theory equilibrium and approaches to modeling standard differential games, as well and the features of Nash equilibria and Markov perfect equilibrium in such games. Prieur spoke in detail about a particular article, one of whose contributors is devoted to Markov’s perfect equilibrium in differential games with changeable modes. In such games, each agent may choose the moment when his own actions change the technological or institutional modes of the economy. The consequences of each person’s decisions—and thus the balance of the system as a whole—are dependent on the past and future decisions of the other participants. This basic approach to the search for Markov equilibrium in differential games is applied to the modeling of games on resource extraction with the possibility of transitioning to new extraction technologies. An analysis of the games defined the optimal moment in time for each participant’s transition to new technology.
Alena Skolkova
