Environmental Policy: The Coevolution of Pollution and Compliance
Yannis Petrohilos-Andrianos () and
Anastasios Xepapadeas ()
No 1519, DEOS Working Papers from Athens University of Economics and Business
We study the evolution of compliance of firms in a setup of taxable emissions. Firms can either choose to comply with the emissions rule or violate it. Violation is considered either as a single option or is let to vary between low and high emissions, inducing a different level of fine if the firm gets caught. The firms can switch between strategies according to an evolutionary proportional rule and the conditions for stability are investigated accounting for two distinct types of probability of inspection.
Keywords: Emission taxes; compliance; replicator dynamics. (search for similar items in EconPapers)
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