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dc.contributor.authorANTOCI, Angelo
dc.contributor.authorBORGHESI, Simone
dc.contributor.authorGALEOTTI, Marcello
dc.contributor.authorRUSSU, Paolo
dc.date.accessioned2022-03-02T17:15:06Z
dc.date.issued2022
dc.identifier.citationEuropean economic review, 2022, Vol. 143, Art. 104023, OnlineOnlyen
dc.identifier.issn0014-2921
dc.identifier.urihttps://hdl.handle.net/1814/74275
dc.descriptionAvailable online 14 January 2022, Version of Record 2 February 2022. Part of special issue: SI: Advances in Sustainability Economics Edited by Lucas Bretschger, Simone Valente. The Full special issue is available in Open Access until 24 March 2022 on the Publisher's site - via the DOI link.en
dc.description.abstractThis paper investigates the possible dynamics that may emerge in an economy in which agents adapt to environmental degradation by increasing the produced output to repair the damages of environmental degradation. The analyzed economy is characterized by both positive and negative externalities. On the one hand, an increase in production-related environmental degradation lowers the net income left at disposal for consumption and investment; on the other hand, it induces an increase in labor and capital to repair environmental damages from production, which enhances the positive externalities occurring in the production process. From the analysis of the model we show that there can be two steady states but only the one with lower capital level can be locally attractive. Both local and global indeterminacy may arise in the model, even with decreasing returns to scale. It follows that one cannot predict a priori which path the economy will follow when converging to an equilibrium, nor the equilibrium the dynamics will eventually converge to. In particular, the trajectories emerging from the model may eventually lead the economy to be trapped in a Pareto-dominated equilibrium with lower capital and higher environmental degradation levels. Moreover, the interplay between positive and negative externalities generates a rich set of possible trajectories that may lead to opposite extreme outcomes, namely, either infinite growth or the collapse of the economy.en
dc.format.mimetypeapplication/pdfen
dc.language.isoenen
dc.publisherElsevieren
dc.relation.ispartofEuropean economic reviewen
dc.relation.ispartofseries[Florence School of Regulation]en
dc.relation.ispartofseries[Climate]en
dc.rightsinfo:eu-repo/semantics/openAccessen
dc.titleMaladaptation to environmental degradation and the interplay between negative and positive externalitiesen
dc.typeArticleen
dc.identifier.doi10.1016/j.euroecorev.2021.104023
dc.identifier.volume143
eui.subscribe.skiptrue
dc.embargo.terms2024-01-14
dc.date.embargo2024-01-14


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