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Dynamical analysis of evolutionary transition toward sustainable technologies

Author

Listed:
  • Fausto Cavalli
  • Ahmad Naimzada
  • Enrico Moretto
Abstract
We propose a model for exploring the feasibility of the green transition between dirty and clean technologies. It relies on an evolutionary framework for the technology selection interacting with the environmental domain, which describes the evolution of pollution. A regulator charges an ambient tax to the producers, and the agents can choose between the less profitable clean technology and the more profitable dirty one, which however is taxed to a greater extent with respect to the clean one. The environmental tax depends endogenously on the level of pollution, which rises because of the producers’ emissions. The pollution stock also naturally decays, and can be abated by involving the resources collected from the taxation. We analytically study the resulting two-dimensional model from both the static and the dynamical points of view, to understand under what conditions the green transition can take place and results in an improvement for the environmental quality. We show that excessive over-taxation of the dirty technology may be not always beneficial, as steady state pollution level can increase above a certain taxation threshold and multiple steady states can emerge. Moreover, dynamics can result in persistent endogenous oscillations that systematically lead to a significant increase in pollution levels. Finally, we discuss the economic rationale for the results also in the light of possible policy suggestions.

Suggested Citation

  • Fausto Cavalli & Ahmad Naimzada & Enrico Moretto, 2023. "Dynamical analysis of evolutionary transition toward sustainable technologies," Working Papers 510, University of Milano-Bicocca, Department of Economics.
    • Handle: RePEc:mib:wpaper:510
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    References listed on IDEAS

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    Cited by:

    1. Cavalli, Fausto & Naimzada, Ahmad & Visetti, Daniela, 2024. "Dynamical analysis of healthcare policy effects in an integrated economic-epidemiological model," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 221(C), pages 315-336.
    2. Fausto Cavalli & Alessandra Mainini & Daniela Visetti, 2024. "The role of taxation in an integrated economic-environmental model: a dynamical analysis," Working Papers 530, University of Milano-Bicocca, Department of Economics.

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