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Dynamic Management of Fossil Fuel, Biofuel, and Solar Energy Read chapter Read first chapter

2014 | OriginalPaper | Chapter

3. On the Dynamics and Effects of Corruption on Environmental Protection

Authors : Elvio Accinelli, Laura Policardo, Edgar J. Sánchez Carrera

Published in: Modeling, Dynamics, Optimization and Bioeconomics I

Publisher: Springer International Publishing

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Abstract

This paper studies the joint dynamics of corruption and pollution in a model of evolutionary game theory, where firms face a given pollution standard and the government must check the compliance to this standard by means of public officials who can be honest or not. A novelty of our paper is that officials decide to be honest or not by imitation, while firms are assumed to be inter-temporal profit maximizers. One of the main findings of the paper is that one possible “bad” outcome characterized by a whole society of polluting firms and corrupt officers can be sustained by rational agents who learn by imitation, despite the existence of multiplicity of equilibria of a perfectly honest population and a more realistic simultaneous presence of honest and dishonest agents. Moreover, we show that the firm’s discount rate is an important decision factor that influences the environmental pollution.

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Footnotes
1
Evolutionary analysis is well-documented in the game theory literature (see [19]).
 
3
See [13] for a definition of imitative behaviour.
 
4
Evolutionary game theory considers populations of decision makers, while analysing the player profiles within these populations, instead of single players. We can therefore identify a population game, where N large populations strategically interact, as an N-player form game, where each player has a large population behind him (see [10]).
 
5
This is the “behavioral rule with inertia” (see [5, 14, 15, 19]) that allows an agent to reconsider her action with probability r ∈ (0, 1) each round.
 
6
For simplicity, we assume that the production’s capacity is always fully exploited, so x(t) can be interpreted as both capacity and level of production.
 
7
Notice that, if p 0 = 0 then: \(\dot{p}_{2} = -\frac{\partial H} {\partial z} = 0 \Rightarrow p_{2}(t)\) is a constant. From the transversality condition it follows that p 2(t) ≡ 0. From the maximum principle is necessary that: \((p_{0},p_{1}(t),p_{2}(t))\not =(0, 0, 0)\;\forall \;t\), then p 1(T) ≠ 0, but this contradicts the transversality condition.
 
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Metadata
Title
On the Dynamics and Effects of Corruption on Environmental Protection
Authors
Elvio Accinelli
Laura Policardo
Edgar J. Sánchez Carrera
Copyright Year
2014
Book
Modeling, Dynamics, Optimization and Bioeconomics I

Print ISBN: 978-3-319-04848-2

Electronic ISBN: 978-3-319-04849-9

Copyright Year: 2014

DOI
https://doi.org/10.1007/978-3-319-04849-9_3