GAME-THEORETIC MODEL FOR THE CONFLICT OF PRODUCERS WITH THE ENVIRONMENTAL POLICY OF THE GOVERNMENT

In the paper the following conflict situation is considered: Certain companies produce and sell the same product, both in green and non-green version. The production cost of the non-green version is lower, but the government sets an environmental tax on it. For the description of the situation a multi-person normal form game is defined where the strategy choice of each producer (player) is the proportion at which it produces the green version, while its payoff is the net profit remaining after paying the eventual environmental tax. The government strategy is setting the tax rate, its payoff is the tax collected from the producers (which is invested then in environmental protection). Under rather general conditions a Nash equilibrium solution is obtained, which at the same time is also the so-called attractive solution. Besides the constant price model, the case of the Cournot type oligopoly market with linear inverse demand function is also considered.