The Economics of Shallow Lakes

Center for Economic Research (CentER) No. 2000-69

33 Pages Posted: 7 Nov 2000

See all articles by Karl-Goran Maler

Karl-Goran Maler

The Royal Swedish Academy of Sciences - Beijer International Institute of Ecological Economics

Anastasios Xepapadeas

Athens University of Economics and Business; University of Bologna - School of Economics, Management, and Statistics

Aart de Zeeuw

Tilburg University - Department of Economics

Date Written: 2000

Abstract

Ecological systems such as shallow lakes are usually non-linear and display discontinuities and hysteresis in their behaviour. These systems often also provide conflicting services as a resource and a waste sink. This implies that the economic analysis of these systems requires to solve a non-standard optimal control problem or, in case of a common property resource, a non-standard differential game. This paper provides the optimal management solution and the open-loop Nash equilibrium for a dynamic economic analysis of the model for a shallow lake. It also investigates whether it is possible to induce optimal management in case of common use of the lake, by means of a tax. Furthermore, an interesting property for the feedback Nash equilibrium is derived.

Key words: non-linear differential games, ecological systems.

JEL Classification: O20

Suggested Citation

Maler, Karl-Goran and Xepapadeas, Anastasios and de Zeeuw, Aart J., The Economics of Shallow Lakes (2000). Center for Economic Research (CentER) No. 2000-69, Available at SSRN: https://ssrn.com/abstract=244679 or http://dx.doi.org/10.2139/ssrn.244679

Karl-Goran Maler

The Royal Swedish Academy of Sciences - Beijer International Institute of Ecological Economics ( email )

The Royal Swedish Academy of Sciences
P.O. Box 50005
S-104 05 Stockholm, SE-104 05
SWEDEN

Anastasios Xepapadeas

Athens University of Economics and Business ( email )

76 Patission Street
Athens, 104 34
Greece

University of Bologna - School of Economics, Management, and Statistics ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy

Aart J. De Zeeuw (Contact Author)

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2065 (Phone)
+31-13-466-3042 (Fax)

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