Pollution and the Bargaining Game

Economic activities continue to expand and social concern on the environment and the impact of pollutants on the region continues to grow. Hence, the need to focus on sustainable development and find an optimal solution between polluters and the surrounding region through bilateral negotiations. This article uses the general function bargaining game to examine the optimal solution when considering the polluters\u27 economic activity and environmental performance. As a result, under no environmental regulations, Pareto optimal is achieved by the surrounding region accepting the transfer of pollution from the polluters. Moreover, the amount of the transfer depends on the difference between the pollution reduction costs at the polluters\u27 optimal rate of pollution reduction and the pollution reduction costs under noenvironmental regulations and the difference between the benefits to the surrounding residents at the polluters\u27 optimal rate of pollution reduction and the benefits to the surrounding residents under no environmental regulations. On the other hand, under strict environmental regulations, Pareto optimal is achieved by polluters compensating the surrounding residents. Moreover, the amount of compensation depends on the difference between the pollution reduction costs at the polluters\u27 optimal rate of pollution reduction and the pollution reduction costs under strict environmental regulations and the difference between the benefits to the surrounding residents at the polluters\u27 optimal rate of pollution reduction and the benefits to the surrounding residents under strict environmental regulations