A Game Theoretic Model for Trading Pollution Discharge Permits in River Systems

Abstract

In this paper, by combining a two-person nonzero-sum game, a multi-objective genetic algorithm and a cooperative game, we present a new game theoretic methodology for trading pollution discharge permits in rivers. A trade-off curve between the average treatment level of dischargers and fuzzy risk of low water quality is gained using the optimization model. Then, by using the two-person nonzero-sum game, the best non-dominated solution is chosen from the trade-off curve. The treatment costs of dischargers corresponding to the selected solution are reallocated among dischargers participating in a coalition and side payments are calculated. The proposed model is applied to the Zarjub River in Iran to illustrate its efficiency and applicability.