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Financial Tools for the Abatement of Traffic Congestion: A Dynamical Analysis

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  • Angelo Antoci
  • Marcello Galeotti
  • Davide Radi

Abstract

In this article we propose a simple mechanism aimed at implementing and supporting environmental protection policies in urban areas based on innovative financial instruments issued by a policy maker, which can be bought by two categories of involved agents, city users and agencies providing the city services. According to this mechanism, virtuous service providers choosing to offer high quality services can obtain cost abatement. City users, recip- rocally, have to pay for entering into the city, but can protect themselves against a city low quality of life by a self-insurance device. The interaction of these two categories of economic agents is modelled by a two-population evolutionary game, where the population of city users strategically interacts with that of service providers. From the analysis of the model it emerges that such a dynamics may lead to a welfare- improving attracting Nash equilibrium at which all city users choose to use environmental-friendly means of transportation and all service providers choose to offer high quality services. However, the basin of attraction of that equilibrium may have a rather complex morphology. In particular more attractors and/or limit cycles can be present. In such a context we indicate sufficient conditions making the virtuous equilibrium a global attractor for all trajectories starting at a mixed-strategy point.
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  • Angelo Antoci & Marcello Galeotti & Davide Radi, 2011. "Financial Tools for the Abatement of Traffic Congestion: A Dynamical Analysis," Computational Economics, Springer;Society for Computational Economics, vol. 38(3), pages 389-405, October.
    • Handle: RePEc:kap:compec:v:38:y:2011:i:3:p:389-405
    DOI: 10.1007/s10614-011-9294-7
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    References listed on IDEAS

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    1. Antoci, Angelo & Sodini, Mauro, 2009. "Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities," Chaos, Solitons & Fractals, Elsevier, vol. 42(3), pages 1439-1450.
    2. Angelo Antoci & Simone Borghesi & Marcello Galeotti, 2013. "Environmental options and technological innovation: an evolutionary game model," Journal of Evolutionary Economics, Springer, vol. 23(2), pages 247-269, April.
    3. Perrings, Charles, 1989. "Environmental bonds and environmental research in innovative activities," Ecological Economics, Elsevier, vol. 1(1), pages 95-110, February.
    4. Angelo Antoci & Marcello Galeotti & Lucio Geronazzo, 2007. "Visitor and Firm Taxes Versus Environmental Options in a Dynamical Context," Journal of Applied Mathematics, Hindawi, vol. 2007, pages 1-15, August.
    5. Gian Italo Bischi & Davide Radi, 2011. "An extension of the Antoci-Dei-Galeotti evolutionary model for environment protection through financial instruments," Working Papers 1105, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2011.
    6. Angelo Antoci & Marcello Galeotti & Davide Radi, 2011. "Financial Tools for the Abatement of Traffic Congestion: A Dynamical Analysis," Computational Economics, Springer;Society for Computational Economics, vol. 38(3), pages 389-405, October.
    7. Costanza, Robert & Perrings, Charles, 1990. "A flexible assurance bonding system for improved environmental management," Ecological Economics, Elsevier, vol. 2(1), pages 57-75, April.
    8. Gian Italo Bischi & Carl Chiarella & Laura Gardini (ed.), 2010. "Nonlinear Dynamics in Economics, Finance and Social Sciences," Springer Books, Springer, number 978-3-642-04023-8, June.
    9. Gwilliam, Ken, 2008. "A review of issues in transit economics," Research in Transportation Economics, Elsevier, vol. 23(1), pages 4-22, January.
    10. Luigi Bonatti & Emanuele Campiglio, 2009. "Mobility Systems and Economic Growth: a Theoretical Analysis of the Long-Term Effects of Alternative Transportation Policies," Department of Economics Working Papers 0907, Department of Economics, University of Trento, Italia.
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    1. Angelo Antoci & Marcello Galeotti & Davide Radi, 2011. "Financial Tools for the Abatement of Traffic Congestion: A Dynamical Analysis," Computational Economics, Springer;Society for Computational Economics, vol. 38(3), pages 389-405, October.
    2. Angelo Antoci & Simone Borghesi & Gerardo Marletto, 2012. "To drive or not to drive? A simple evolutionary model," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2012(2), pages 31-47.
    3. Mikhail Anufriev & Davide Radi & Fabio Tramontana, 2018. "Some reflections on past and future of nonlinear dynamics in economics and finance," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 41(2), pages 91-118, November.
    4. Cabo, Francisco & García-González, Ana, 2020. "Interaction and imitation with heterogeneous agents: A misleading evolutionary equilibrium," Journal of Economic Behavior & Organization, Elsevier, vol. 179(C), pages 152-174.
    5. Francisco Cabo & Ana García-González, 2019. "Interaction and imitation in a world of Quixotes and Sanchos," Journal of Evolutionary Economics, Springer, vol. 29(3), pages 1037-1057, July.
    6. Lei Li & Wenting Liu & Lindi Xiao & Hui Sun & Shi Wang, 2018. "Environmental Protection in Scenic Areas: Traffic Scheme for Clean Energy Vehicles Based on Multi-agent," Computational Economics, Springer;Society for Computational Economics, vol. 52(4), pages 1069-1087, December.

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