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Electronic Research Announcements of the American Mathematical Society [electronic only]
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Electronic Research Announcements of the American Mathematical Society [electronic only]
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We analyse the case of certificates of environmental improvements and full cooperation of two identical agents. We model pollution levels as geometric Brownian motions with quadratic costs of improvements. Our main result is the construction of the optimal improvements strategy in the case of separate actions, collusive actions and fusion. In certain range of the model parameters, the fusion solution generates lower pollution levels than separate and collusive actions.
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