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Evolutionary Analysis of Climate Policy and Renewable Energy: Heterogeneous Agents, Relative Welfare and Social Network

Volker Nannen and Jeroen van den Bergh

MPRA Paper from University Library of Munich, Germany

Abstract: We demonstrate how an evolutionary agent-based model can be used to evaluate climate policies that take the heterogeneity of strategies of individual agents into account. An essential feature of the model is that the fitness of an economic strategy is determined by the relative welfare of the associated agent as compared to its immediate neighbors in a social network. This enables the study of policies that affect relative positions of individuals. We formulate two innovative climate policies, namely `prizes', altering directly relative welfare, and `advertisement', which influences the social network of interactions. The policies are illustrated using a simple model of global warming where a resource with a negative environmental impact---fossil energy---can be replaced by an environmentally neutral yet less cost effective alternative, namely renewable energy. It is shown that the general approach enlarges the scope of economic policy analysis.

Keywords: agent-based modeling; behavioral economics; climate policy; evolutionary economics; relative welfare; social network (search for similar items in EconPapers)
JEL-codes: B52 H23 Q54 C73 (search for similar items in EconPapers)
Date: 2008-07-14
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https://mpra.ub.uni-muenchen.de/25881/1/MPRA_paper_25881.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/43690/1/MPRA_paper_43690.pdf revised version (application/pdf)
https://mpra.ub.uni-muenchen.de/43783/1/MPRA_paper_43783.pdf revised version (application/pdf)

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