Abstract
Considering a basin composed of multiple upstream and downstream regions with the pollution occurring across regional boundaries, a Stackelberg game model is developed to investigate the multiple ecological compensation strategies for transboundary pollution control. The results show that (1) under the equilibrium strategy of ecological compensation all regions obtain a Pareto improvement result. (2) Ecological compensation results in an increase in total abatement investment. In particular, a very interesting result is that (3) rising abatement costs in a region compensate more for its upstream regions, whereas its downstream regions do not compensate more for it.
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