An extension of the Antoci-Dei-Galeotti evolutionary model for environment protection through financial instruments

Gian Italo Bischi and Davide Radi ()

No 1105, Working Papers from University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini

Abstract: This work moves from a recent paper by Antoci, Dei and Galeotti [1] where a dynamic model is proposed to describe an innovative method to improve environmental quality based on the exchange of financial activities, promoted by a Public Administration, between firms and tourists in a given region. We extend their analysis in two directions: we first perform a global analysis of the basins of attraction to check the stability extents of the coexisting stable attractors of the model, and we show that some undesirable and sub-optimal stable equilibria always exist, whose basins may be quite intermingled with those of the optimal equilibrium; then we introduce a structural change of the model by assuming that the Public Administration, besides its action as an intermediary between visitors and polluting firms, also performs a direct action for the pollution control. We show how the cost of this direct action of the Public Administration can be balanced by proper taxes and we prove that undesired equilibria can be ruled out by a suitable balance of financial instruments and direct actions of Public Administration for environmental remediation.

Keywords: Environmental economics; evolutionary dynamics; replicator equations; multistability; basins of attraction. (search for similar items in EconPapers)
JEL-codes: D6 H41 N4 Q2 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2011, Revised 2011
New Economics Papers: this item is included in nep-env
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Citations: View citations in EconPapers (3)

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http://www.econ.uniurb.it/RePEc/urb/wpaper/WP_11_05.pdf First version, 2011 (application/pdf)

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