Can harmful events be another source of environmental traps?

Can Askan Mavi ()
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Can Askan Mavi: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper aims to present a new explanation for environmental traps through the presence of endogenous hazard rate. We show that adaptation and mitigation policies affect the occurrence of environmental traps differently. The former could cause environmental traps, whereas the latter could help society avoid such traps by decreasing the probability of a harmful event occurring. As a result, we present a new trade-off between adaptation and mitigation policies different than the usual dynamic trade-off that is highlighted in many studies and is crucial to developing countries. Contrary to the literature, when an economy is in a trap, an economy with a high environmental quality equilibrium tends to be more conservative in terms of resource exploitation than an economy with a low environmental quality equilibrium, which implies a heterogeneous reaction against the endogenous hazard rate.

Keywords: harmful event; occurrence hazard; tipping points; multiple equilibria; adaptation; mitigation (search for similar items in EconPapers)
Date: 2020-08
Note: View the original document on HAL open archive server: https://amu.hal.science/hal-02880592
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Citations: View citations in EconPapers (3)

Published in Journal of Mathematical Economics, 2020, 89, pp.29-46. ⟨10.1016/j.jmateco.2020.04.005⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02880592

DOI: 10.1016/j.jmateco.2020.04.005

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