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What's in it for me? - An analysis of environmental investments through a game theoretic lens

What's in it for me? - An analysis of environmental investments through a game theoretic lens Investments in clean technology are cost-intensive and risky, so cost- and risk-sharing between several firms is a rational option. As each company strives for the largest possible share of gain, the question arises of how the jointly generated benefit should be shared. A mechanism is sought that is judged to be fair and is therefore accepted by the partners. Several solution mechanisms are available if such investments are interpreted as a cooperative game. The nature, characteristics and calculation of these mechanisms are discussed in this paper. Moreover, the most important properties of cooperative games are presented. Different solution concepts will be discussed and their (dis-)advantages are highlighted. Keywords: environmental management; fairness; cooperative game theory; Shapley value; nucleolus; -value. Reference to this paper should be made as follows: Mueller, D. (2016) `What's in it for me? ­ An analysis of environmental investments through a game theoretic lens', Int. J. Innovation and Sustainable Development, Vol. 10, No. 2, pp.198­218. Biographical notes: David Mueller is a Full Professor in Controlling and Management Accounting at the Brandenburg University of Technology Cottbus-Senftenberg (BTU-CS). He studied European Business Studies and Business Administration in Germany and Spain. He received his PhD in 2004 and his http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Innovation and Sustainable Development Inderscience Publishers

What's in it for me? - An analysis of environmental investments through a game theoretic lens

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Publisher
Inderscience Publishers
Copyright
Copyright © 2016 Inderscience Enterprises Ltd.
ISSN
1740-8822
eISSN
1740-8830
DOI
10.1504/IJISD.2016.075551
Publisher site
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Abstract

Investments in clean technology are cost-intensive and risky, so cost- and risk-sharing between several firms is a rational option. As each company strives for the largest possible share of gain, the question arises of how the jointly generated benefit should be shared. A mechanism is sought that is judged to be fair and is therefore accepted by the partners. Several solution mechanisms are available if such investments are interpreted as a cooperative game. The nature, characteristics and calculation of these mechanisms are discussed in this paper. Moreover, the most important properties of cooperative games are presented. Different solution concepts will be discussed and their (dis-)advantages are highlighted. Keywords: environmental management; fairness; cooperative game theory; Shapley value; nucleolus; -value. Reference to this paper should be made as follows: Mueller, D. (2016) `What's in it for me? ­ An analysis of environmental investments through a game theoretic lens', Int. J. Innovation and Sustainable Development, Vol. 10, No. 2, pp.198­218. Biographical notes: David Mueller is a Full Professor in Controlling and Management Accounting at the Brandenburg University of Technology Cottbus-Senftenberg (BTU-CS). He studied European Business Studies and Business Administration in Germany and Spain. He received his PhD in 2004 and his

Journal

International Journal of Innovation and Sustainable DevelopmentInderscience Publishers

Published: Jan 1, 2016

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