Regulation of Farming Activities: An Evolutionary Approach
AbstractFarming activity is modeled under an intervention policy regime, combining the environmental requirements of the Council Nitrates Directive (91/676/EEC) and the compensatory provisions of the second pillar of the Common Agricul- tural Policy. The optimizing behavioural rule along with the evolutionary rule is employed in order to model the individual farmer's decision making, regard- ing compliance or not with regulatory provisions. The impact of these di�erent behavioral rules on the selection of monitoring effort and thus on the compli- ance incentives of a population of farmers is examined. Analysis indicated that if monitoring effort is chosen arbitrarily or optimally based on the accustomed full rationality assumption then the population adopts a monomorphic behav- ior in the long-run, involving either full or noncompliance with the Directive's provisions. A polymorphic behavior involving partial compliance of the pop- ulation also arises if the dynamic model of optimal monitoring is constrained by replicator dynamics which represent the imitation rules. It is evident, thus, that the number and the type of the equilibrium steady-states is affected by the assumption regarding the behavioral rule adopted by regulated agents. Fi- nally, the dynamics of the population of compliant farmers is also assessed under accumulation of monitoring capital indicating identical properties.
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Bibliographic InfoPaper provided by University of Crete, Department of Economics in its series Working Papers with number 0811.
Length: 35 pages
Date of creation: 10 Jun 2008
Date of revision:
Nitrates Directive; agri-environmental programs; monitoring effford; monitoring capital; rationality; optimal behavioral rule; replicator dynamics; imitation;
Find related papers by JEL classification:
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Institutional; Evolutionary
This paper has been announced in the following NEP Reports:
- NEP-AGR-2008-06-21 (Agricultural Economics)
- NEP-ALL-2008-06-21 (All new papers)
- NEP-ENV-2008-06-21 (Environmental Economics)
- NEP-EVO-2008-06-21 (Evolutionary Economics)
- NEP-REG-2008-06-21 (Regulation)
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