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An evolutionary game on compliant and non-compliant firms in groundwater exploitation

Author

Listed:
  • Marta Biancardi

    (University of Bari)

  • Gianluca Iannucci

    (University of Firenze)

  • Giovanni Villani

    (University of Bari)

Abstract

This paper studies how to counter the illegal exploitation of common groundwater resource in an evolutionary game approach. The access is not free and firms have to pay a royalty depending on the quantity of water pumped. However, some firms could decide to not pay the royalty and face the risk of being sanctioned by the regulator authority. The overall sanction is composed of a fixed amount and of the royalty not payed. From the analysis of the model it emerges that coexistence at the equilibrium between compliant and non-compliant firms is possible and policy instruments are partially able to counter the unauthorized exploitation. In particular, increasing the sanction level reduces the number of non-compliant firms but raises the incidence of illegal pumping. The opposite occurs if the regulatory authority increases the royalty price. To pursue both goals, applying a balance of policies is necessary.

Suggested Citation

  • Marta Biancardi & Gianluca Iannucci & Giovanni Villani, 2022. "An evolutionary game on compliant and non-compliant firms in groundwater exploitation," Annals of Operations Research, Springer, vol. 318(2), pages 831-847, November.
    • Handle: RePEc:spr:annopr:v:318:y:2022:i:2:d:10.1007_s10479-021-04297-5
    DOI: 10.1007/s10479-021-04297-5
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    References listed on IDEAS

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    Cited by:

    1. Peng Liu & Xiaoling Wei, 2022. "Three-Party Evolutionary Game of Shared Manufacturing under the Leadership of Core Manufacturing Company," Sustainability, MDPI, vol. 14(20), pages 1-16, October.
    2. Biancardi, Marta & Iannucci, Gianluca & Villani, Giovanni, 2024. "Water dynamics and environmental social practice in a differential game," Socio-Economic Planning Sciences, Elsevier, vol. 92(C).

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