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Pattern formation, spatial externalities and regulation in coupled economic-ecological systems

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  • Brock, William
  • Xepapadeas, Anastasios

Abstract

We study the management of ecosystems in which interacting state variables that are affected by management decisions diffuse in space. We study pattern formation first in a setting where economic agents maximize myopic profits and ignore spillovers onto agents at other sites, and second in the context of a social planner who internalizes these spillovers. We compare patterns under these two institutions and study how the differences in the patterns generated by these two institutions impact the design of regulatory schemes to internalize the externalities. At the same time we introduce new methods based on Fourier series type decompositions that enable us to turn an intractable infinite dimensional optimal control problem into a countable number of finite dimensional optimal control problems. As far as we know these methods are new to the economics literature. Our theory is applied to the management and regulation of a semi-arid system.

Suggested Citation

  • Brock, William & Xepapadeas, Anastasios, 2010. "Pattern formation, spatial externalities and regulation in coupled economic-ecological systems," Journal of Environmental Economics and Management, Elsevier, vol. 59(2), pages 149-164, March.
  • Handle: RePEc:eee:jeeman:v:59:y:2010:i:2:p:149-164
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    1. repec:hal:journl:halshs-00674020 is not listed on IDEAS
    2. Anastasios Xepapadeas, 2010. "Modeling complex systems," Agricultural Economics, International Association of Agricultural Economists, vol. 41(s1), pages 181-191, November.
    3. La Torre, Davide & Liuzzi, Danilo & Marsiglio, Simone, 2015. "Pollution diffusion and abatement activities across space and over time," Mathematical Social Sciences, Elsevier, vol. 78(C), pages 48-63.
    4. Klaus Desmet & Esteban Rossi-Hansberg, 2014. "Spatial Development," American Economic Review, American Economic Association, vol. 104(4), pages 1211-1243, April.
    5. Camacho, Carmen & Pérez-Barahona, Agustín, 2015. "Land use dynamics and the environment," Journal of Economic Dynamics and Control, Elsevier, vol. 52(C), pages 96-118.
    6. Brock, William A. & Xepapadeas, Anastasios & Yannacopoulos, Athanasios N., 2014. "Spatial externalities and agglomeration in a competitive industry," Journal of Economic Dynamics and Control, Elsevier, vol. 42(C), pages 143-174.
    7. W.A. Brock & A. Xepapadeas & A.N. Yannacopoulos, 2014. "Optimal Control in Space and Time and the Management of Environmental Resources," Annual Review of Resource Economics, Annual Reviews, vol. 6(1), pages 33-68, October.
    8. Javier de Frutos & Guiomar Martín-Herrán, 2016. "Pollution control in a multiregional setting: a differential game with spatially distributed controls," Gecomplexity Discussion Paper Series 201601, Action IS1104 "The EU in the new complex geography of economic systems: models, tools and policy evaluation", revised Jan 2016.
    9. Desmet, Klaus & Henderson, J. Vernon, 2015. "The Geography of Development Within Countries," Handbook of Regional and Urban Economics, Elsevier.
    10. William Brock & Anastasios Xepapadeas & Athanasios Yannacopoulos, "undated". "Robust Control of a Spatially Distributed Commercial Fishery," DEOS Working Papers 1303, Athens University of Economics and Business.
    11. W. A. Brock & A. Xepapadeas, 2015. "Modeling Coupled Climate, Ecosystems, and Economic Systems," Working Papers 2015.66, Fondazione Eni Enrico Mattei.
    12. Brock, William & Xepapadeas, Anastasios, 2008. "General Pattern Formation in Recursive Dynamical Systems Models in Economics," MPRA Paper 12305, University Library of Munich, Germany.
    13. Xepapadeas, A. & Yannacopoulos, A.N., 2016. "Spatial growth with exogenous saving rates," Journal of Mathematical Economics, Elsevier, vol. 67(C), pages 125-137.
    14. Simon Levin & A. Xepapadeas, 2015. "Transboundary Capital and Pollution Flows and the Emergence of Regional Inequalities," Working Papers 2015.69, Fondazione Eni Enrico Mattei.
    15. Liu, Yanxu & Sims, Charles, 2016. "Spatial-dynamic externalities and coordination in invasive species control," Resource and Energy Economics, Elsevier, vol. 44(C), pages 23-38.
    16. Anastasios Xepapadeas, "undated". "Diffusion and Spatial Aspects," DEOS Working Papers 1232, Athens University of Economics and Business.
    17. Anastasios Xepapadeas & Athanasios Yannacopoulos & Andreas Ioannidis, 2014. "Spatial Growth: The Distribution of Capital across Locations when Saving Rates are Exogenous," DEOS Working Papers 1412, Athens University of Economics and Business.
    18. Yun, Seong Do & Gramig, Benjamin M., 2014. "Dynamic Optimization of Ecosystem Services: A Comparative Analysis of Non-Spatial and Spatially-Explicit Models," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170450, Agricultural and Applied Economics Association.
    19. Behringer, Stefan & Upmann, Thorsten, 2014. "Optimal harvesting of a spatial renewable resource," Journal of Economic Dynamics and Control, Elsevier, vol. 42(C), pages 105-120.
    20. Behringer, Stefan & Upmann, Thorsten, 2017. "Harvesting a Remote Renewable Resource," Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168250, Verein für Socialpolitik / German Economic Association.
    21. Elena G. Irwin, 2010. "New Directions For Urban Economic Models Of Land Use Change: Incorporating Spatial Dynamics And Heterogeneity," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 65-91.
    22. David Aadland & Charles Sims & David Finnoff, 2015. "Spatial Dynamics of Optimal Management in Bioeconomic Systems," Computational Economics, Springer;Society for Computational Economics, vol. 45(4), pages 545-577, April.

    More about this item

    Keywords

    Pattern formation Reaction-diffusion Diffusion instability Spatial externalities Regulation;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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