Critical Mineral Depletion and Recycling: From the Perspective of the Cooperation and Open-Loop Competition

E-print/Working paper (2023)

Critical minerals are essential to the success of the transition to clean and sustainable technology. However, critical minerals face supply chain disruption, resource depletion, a lack of recycling ... [more ▼]

Critical minerals are essential to the success of the transition to clean and sustainable technology. However, critical minerals face supply chain disruption, resource depletion, a lack of recycling technology and minimum demand, which may be increasing over time, at least in the short run. This paper models critical mineral extraction and recycling strategies under international cooperation and open-loop commitment competition. We show that (1) recycling technology can only partially reduce dependence on the virgin supply of critical minerals, given that recycling essentially relies on the accumulated supply from depletable resources; (2) the social planner's Markovian optimal market supply is based on either virgin or recyclable resources, with the more socially desirable being used first; (3) if the recyclable resource is exhausted, the social planner does not have an optimal choice regarding how to exploit the remaining virgin resource; but (4) under open-loop commitment, the two resources can coexist until the virgin resource is exhausted. [less ▲]

Optimal Timing of Carbon Capture and Storage Policies - a Social Planner's View

E-print/Working paper (2022)

Carbon capture and storage (CCS) is considered one of the most realistic and plausible options for reducing greenhouse gas (GHG) emissions from large pollution sources. However, CCS deployment is costly ... [more ▼]

Carbon capture and storage (CCS) is considered one of the most realistic and plausible options for reducing greenhouse gas (GHG) emissions from large pollution sources. However, CCS deployment is costly. This paper considers the social cost of CCS projects and GHG damage from a central planer's point of view, providing clear information about when each player should deploy CCS. The findings are twofold: (1) given the heterogeneity of players, it is not socially optimal for all players to start CCS projects at the same time; instead, the player that has a cost advantage should start first; (2) it may be socially desirable for the player with a cost disadvantage never starts CCS. We show the conditions that support both possibilities. The second finding provides a clear policy guideline for the decision-maker: reduce the costs of the high-cost player in order to reduce global GHG emissions, provided that is the aim of the supranational institute. [less ▲]

Optimal lockdown and vaccination policies to contain the spread of a mutating infectious disease

E-print/Working paper (2022)

We develop a piecewise deterministic control model to study optimal lockdown and vaccination policies to manage a pandemic. Lockdown is modeled as an impulse control that allows the system to switch from ... [more ▼]

We develop a piecewise deterministic control model to study optimal lockdown and vaccination policies to manage a pandemic. Lockdown is modeled as an impulse control that allows the system to switch from one restriction regime of restrictions to another. Vaccination policy is a continuous control. Decisions are taken under the risk of mutations of the disease, with repercussions on the transmission rate. The decision maker follows a cost minimization objective. We first characterize the optimality conditions for impulse control and show how the prospect of a mutation affects the decision maker's choice by inducing her to anticipate the relative benefit of a regime change after a mutation has occurred. Under some parametric conditions, our problem admits infinitely many value functions. We show the existence of a minimum value function that is a natural candidate to the solution given the nature of the problem. Focusing on this specific value function, we finally study the features of the optimal policy, especially the timing of impulse control. We prove that uncertainty surrounding future \bad" vs. \good" mutation of the disease expedites vs. delays the adoption of lockdown measures. [less ▲]

Pandemic Impacts on Sustainability and Hartwick’s Rule

E-print/Working paper (2022)

In this study, we present a modified Hartwick rule encompassing the dynamics of pandemic, such as COVID-19. In our setting, the labor productivity gradually improves after the pandemic shock and may even ... [more ▼]

In this study, we present a modified Hartwick rule encompassing the dynamics of pandemic, such as COVID-19. In our setting, the labor productivity gradually improves after the pandemic shock and may even go beyond its pre-pandemic level due to the remote work and digitalization as also suggested by the empirical evidence. We demonstrate that a gradual labor productivity increase helps to conserve natural resources. We provide a theoretical foundation for a“sooner-the-better" strategy to control a pandemic, and we show that policy maker should implement a “whatever it costs” response to ensure that the transmission rate of the virus is below the recovery rate from the very beginning of the pandemic. Otherwise, the economy cannot have a sustained utility. We also analyze the implications of an “uncertain” pandemic on the intertemporal dynamics of natural resource and capital accumulation under the maximin criterion. Another important finding is that there exists a new economic and public health trade-off since a strong prevention policy is shown to decrease capital accumulation. [less ▲]

Uncertainty-driven symmetry-breaking and stochastic stability in a generic differential game of lobbying

in Economic Theory (2022)

We study a 2-players stochastic differential game of lobbying. Players invest in lobbying activities to alter the legislation in her own benefit. The payoffs are quadratic and uncertainty is driven by a ... [more ▼]

We study a 2-players stochastic differential game of lobbying. Players invest in lobbying activities to alter the legislation in her own benefit. The payoffs are quadratic and uncertainty is driven by a Wiener process. We consider the Nash symmetric game where players face the same cost and extract symmetric payoffs, and we solve for Markov Perfect Equilibria (MPE) in the class of affine functions. First, we prove a general sufficient (catching up) optimality condition for two-players stochastic games with uncertainty driven by Wiener processes. Second, we prove that the number and nature of MPE depend on the extent of uncertainty (i.e the variance of the Wiener processes). In particular, we prove that while a symmetric MPE always exists, two asymmetric MPE emerge if and only if uncertainty is large enough. Third, we study the stochastic stability of all the equilibria. We notably find, that the state converges to a stationary invariant distribution under asymmetric MPE. Fourth, we study the implications for rent dissipation asymptotically and compare the outcomes of symmetric vs asymmetric MPE in this respect, ultimately enhancing again the role of uncertainty. [less ▲]

Is a dynamic approach to tax games relevant?

in Annals of Economics and statistics (2021), 144

In this paper, we argue that static models provide an incomplete analysis of interjurisdictional tax competition. Accordingly, one can doubt whether a one-shot view is suitable for analyzing real world ... [more ▼]

In this paper, we argue that static models provide an incomplete analysis of interjurisdictional tax competition. Accordingly, one can doubt whether a one-shot view is suitable for analyzing real world tax competition. Contrary to previous contributions in tax competition, we are able to model the interplay between changing tax rates and sluggish factor adjustments. We demonstrate that the intensity of tax competition is impacted by the temporal nature of the game. The commitment of governments to stick to their tax policies for a given period (open-loop behavior) leads to less intense competition relative to a static approach. If the policymakers continuously update their tax rates (Markovian behavior), competition is fiercer than in a static game, except for the case where capital adjustment is relatively sluggish and the governments' marginal valuation of public goods is high enough. [less ▲]

Uncertainty-driven symmetry-breaking and stochastic stability in a generic differential game of lobbying

E-print/Working paper (2021)

We study a 2-players stochastic differential game of lobbying. Players have opposite interests; at any date, each player invests in lobbying activities to alter the legislation, the continuous state ... [more ▼]

We study a 2-players stochastic differential game of lobbying. Players have opposite interests; at any date, each player invests in lobbying activities to alter the legislation, the continuous state variable of the game, in her own benefit. The payoffs are quadratic and uncertainty is driven by a Wiener process. We prove that while a symmetric Markov Perfect Equilibrium (MPE) always exists, (two) asymmetric MPE only emerge when uncertainty is large enough. In the latter case, the legislative state converges to a stationary invariant distribution. We fully characterize existence and stochastic stability of the legislative state for both types of MPE. We finally study the implications for rent dissipation asymptotically. We show in particular that while the average rent dissipation is lower with asymmetric equilibria relative to the symmetric, the former yield larger losses at the most likely asymptotic states for large enough but moderate uncertainty. [less ▲]

Refugee Mobility: Evidence from Phone Data in Turkey

in Salah, Albert Ali; Pentland, Alex; Lepri, Bruno (Eds.) et al Guide to Mobile Data Analytics in Refugee Scenarios: The 'Data for Refugees Challenge' Study (2019)

Our research report employs the D4R data and combines it with several <br />other sources to study one of the multiple aspects of integration of refugees, namely <br />the mobility of refugees across ... [more ▼]

Our research report employs the D4R data and combines it with several <br />other sources to study one of the multiple aspects of integration of refugees, namely <br />the mobility of refugees across provinces in Turkey. In particular, we employ a <br />standard gravity model to empirically estimate a series of determinants of refugee <br />movements. These include the standard determinants such as province characteristics, <br />distances across provinces, levels of income, network effects as well as some <br />refugee-specific determinants such as the presence of refugee camps and the intensity <br />of phone call interaction among refugees. Importantly, we explore the effect <br />of certain categories of news events, notably protests, violence, and asylum grants. <br />Considering news as an indicator of policy implemented at the provincial level, we <br />gain a better understanding as to how policy can facilitate refugee mobility and thus <br />enhance integration. To benchmark our findings, we estimate the same model for the <br />mobility of individuals with a non-refugee status. [less ▲]

Climate politics: how public persuasion affects the trade-off between environmental and economic performance

in Mathematical Social Sciences (2019)

This paper aims at studying the impact of public persuasion, through information dissemination, on environmental and economic performance. A differential game in which opposite interest groups compete for ... [more ▼]

This paper aims at studying the impact of public persuasion, through information dissemination, on environmental and economic performance. A differential game in which opposite interest groups compete for bringing the majority’s environmental concern closer to their views is developed. The results show a strong asymmetry in the impact of public persuasion. It may bring the median voter economy closer to the social optimum in the long run, thereby reducing environmental and economic distorsions. But this only occurs when the environmental group exhibits a radical ideology and people are initially closer to the industrialists’ views. By contrast, economies where industrial groups are powerful and strongly opposed to environmental protection never benefit from the outcome of the game of persuasion. This may explain why the US have failed to take action on global warming up to now. [less ▲]

A Pedagogical Note on Risk Sharing Versus Instability in International Financial Integration: When Obstfeld Meets Stiglitz

in Open Economies Review (2019)

The pure risk sharing mechanism implies that financial liberalization is growth enhancing for all countries as the world portfolio shifts from safe low-yield capital to riskier high-yield capital. This ... [more ▼]

The pure risk sharing mechanism implies that financial liberalization is growth enhancing for all countries as the world portfolio shifts from safe low-yield capital to riskier high-yield capital. This result is typically obtained under the assumption that the volatilities for risky assets prevailing under autarky are not altered after liberalization. We relax this assumption within a simple two-country model of intertemporal portfolio choices. By doing so, we put together the risk sharing effect and a well defined instability effect. We identify the conditions under which liberalization may cause a drop in growth. These conditions combine the typical threshold conditions outlined in the literature, which concern the deep characteristics of the economies, and size conditions on the instability effect induced by liberalization. [less ▲]