Abstract:
Dynamic oligopolies are analysed in the case when the firms treat pollution
directly and share the cost in proportion to their share in the total output. If instantaneous
information on the firms' output is available to all firms as well as to the pollution
treatment agency, then the equilibrium is locally asymptotically stable. However
the presence of information lags introduces the possibility of instability. Local stability
analysis of the information lag situation is performed and conditions for local stability/
instability and the birth of limit cycles are obtained.
