Pollution Abatement and Lobbying in a Cournot Game. An Agent-Based Modelling approach

Marco Catola and Silvia Leoni

Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy

Abstract: The application of Agent-Based Modelling to Game Theory allows us to benefit from the strengths of both approaches, and to enrich the study of games when solutions are difficult to elicit analytically. Using an agent-based approach to sequential games, however, poses some issues that result in a few applications of this type. We contribute to this aspect by applying the agent-based approach to a lobbying game involving environmental regulation and firms’ choice of abatement. We simulate this game and test the robustness of its game-theoretical prediction against the results obtained. We find that while theoretical predictions are generally consistent with the simulated results, this novel approach highlights a few differences. First, the market converges to a green state for a larger number of cases with respect to theoretical predictions. Second, simulations show that it is possible for this market to converge to a polluting state in the very long run. This result is not envisaged by theoretical predictions. Sensitivity experiments on the main model parameters confirm the robustness of our findings.

Keywords: Agent-Based-Modelling; Environmental Regulation; Industrial Organisation; Lobbying (search for similar items in EconPapers)
JEL-codes: C63 D72 L13 L51 (search for similar items in EconPapers)
Date: 2023-06-01
New Economics Papers: this item is included in nep-cmp, nep-ene, nep-env and nep-hme
Note: ISSN 2039-1854
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.ec.unipi.it/documents/Ricerca/papers/2023-294.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pie:dsedps:2023/294

Access Statistics for this paper

More papers in Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy Contact information at EDIRC.
Bibliographic data for series maintained by ().