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Mathematical Problems in Engineering
Volume 2013, Article ID 312585, 13 pages
http://dx.doi.org/10.1155/2013/312585
Research Article

Governance Mechanism for Global Greenhouse Gas Emissions: A Stochastic Differential Game Approach

Wei Yu1,2 and Baogui Xin1,3

1School of Management, Tianjin University, Tianjin 300072, China
2Department of Mathematics, Tianjin Polytechnic University, Tianjin 300387, China
3School of Economics and Management, Shandong University of Science and Technology, Qingdao 266590, China

Received 31 January 2013; Revised 2 May 2013; Accepted 3 May 2013

Academic Editor: Wuquan Li

Copyright © 2013 Wei Yu and Baogui Xin. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Today developed and developing countries have to admit the fact that global warming is affecting the earth, but the fundamental problem of how to divide up necessary greenhouse gas reductions between developed and developing countries remains. In this paper, we propose cooperative and noncooperative stochastic differential game models to describe greenhouse gas emissions decision makings of developed and developing countries, calculate their feedback Nash equilibrium and the Pareto optimal solution, characterize parameter spaces that developed and developing countries can cooperate, design cooperative conditions under which participants buy the cooperative payoff, and distribute the cooperative payoff with Nash bargaining solution. Lastly, numerical simulations are employed to illustrate the above results.