Following a brief review of the management of environmental externalities under strategic interactions in the traditional temporal domain, results are extended to the spatiotemporal domain. Conditions for spatial open-loop and feedback Nash equilibria, along with conditions for the benchmark cooperative solution, are presented and compared. A simplified numerical example illustrates the spatial patterns emerging at a steady state under Fickian diffusion and dispersal kernels, and the inefficiency of spatially flat emission taxes. This conceptual framework could provide new research areas.
Keywords: dispersion kernel; feedback Nash equilibrium; open-loop Nash equilibrium; optimal emission tax; spatial diffusion.