Abstract
Differential games are the natural framework of analysis for many problems in environmental and resource economics. This chapter will discuss the concepts and techniques of differential games and it will analyze two famous models in environmental and resource economics, the game of international pollution control and the lake game. It will be shown that existing solution techniques can cover some of the gap between non-cooperative Nash equilibria and the cooperative outcome. It will also be shown that the regulation by means of realistic tax rates can cover some of the remaining gap but not all the way.
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