Complexity and the Economics of Climate Change: a Survey and a Look Forward

URL des Documents de travail : http://ces.univ-paris1.fr/cesdp/cesdp2016.htmlDocuments de travail du Centre d'Economie de la Sorbonne 2016.58 - ISSN : 1955-611XWe provide a survey of the micro and macro economics of climate change from a complexity science perspective and we discuss the challenges ahead for this line of research. We identify four areas of the literature where complex system models have already produced valuable insights: (i) coalition formation and climate negotiations, (ii) macroeconomic impacts of climate-related events, (iii) energy markets and (iv) diffusion of climate-friendly technologies. On each of these issues, accounting for heterogeneity, interactions and disequilibrium dynamics provides a complementary and novel perspective to the one of standard equilibrium models. Furthermore, it highlights the potential economic benefits of mitigation and adaptation policies and the risk of under-estimating systemic climate change-related risks

Modelling bargaining behaviors within biotech clusters - Towards the "power of the weak" emergence?

If spatial and industrial economics theorical models, such as industrial districts, clusters, or learning regions propose a large analysis of differentiated coordination mecanisms, it however not really takes into account behavior of dispute dynamics, such as conflict of bargaining and power, which can explain both diversity and ambivalence of local coordinations. So, our purpose in this contribution is to bring to light that bargaining and power conflicts are at stake in coordinations structuration within territories. We base this contribution on Artificial Life simulations involving public and private local actors who bargain to share a local resource using more or less sophisticated strategies. On a methodologic point of view, our thought is based on an empirical established fact. Analysis of a biotechnology cluster in Toulouse-France (Leroux I., 2002, 2004) indeed contributes to bring to light that coordinations involving pharmaceutical industry, local communities and local research laboratories are based on direct or indirect evolving domination and concession bargaining games. If industrial firms play "the power of the weak" game, making concession of their decision power to public research laboratories, they endeavour systematically to exerce an influence or a discrimination power, by using hided and indirect means that forward by local communities.Starting from this established fact, we propose Artificial Life simulations of local bargaining games, inspired from the T. Ellingsen (1997) bargaining evolutionnary game. This is a Nash demand game under ultimatum. It leads to the interaction of obstinate agents whose demands are independent of those of the adversaries, and sophisticated agents who adapt their demand to that hoped for of their adversaries rather than gain nothing. As a result, our simulations show that bargainings between these local actors lead to an agreement which is not a perfect share, or an "universal" rule, but a compromise frequently hiding complex mecanisms of domination and concession. The main contribution of these simulations, which are based on genetic algorithms, is to put in a prominent position the variations of behavioral rules. We show how bargaining is an evolving processus based on domination and concession behaviors (influence, coercion,…) bringing to light the T. Schelling (1960) "power of the weak". This result brings to the fore the question of flexibility and phasing dynamics of power behaviors in local coordination bargainings. This model can contributes to open new researches focused on power and conflict strategies within local coordinations.

Complexity and the Economics of Climate Change: A Survey and a Look Forward

Climate change is one of the most daunting challenges human kind has ever faced. In the paper, we provide a survey of the micro and macro economics of climate change from a complexity science perspective and we discuss the challenges ahead for this line of research. We identify four areas of the literature where complex system models have already produced valuable insights: (i) coalition formation and climate negotiations, (ii) macroeconomic impacts of climate-related events, (iii) energy markets and (iv) diffusion of climatefriendly technologies. On each of these issues, accounting for heterogeneity, interactions and disequilibrium dynamics provides a complementary and novel perspective to the one of standard equilibrium models. Furthermore, it highlights the potential economic benefits of mitigation and adaptation policies and the risk of under-estimating systemic climate change-related risks

Literature Overview on the Field of Co-opetition

Co-opetition is a perspective on business relationships which highlights the ambivalence of competition and cooperation. Game theory is regarded as the mathematical tool for solving co-opetition related problems. The major step for introducing "co-opetition" into public discussion and economic research has been made by Brandenburger and Nalebuff in 1996. However they target a non-professional readership. A multitude of publications has followed, where the authors mostly focus on specific aspects of the problem and investigate particular industries. This paper gives a comprehensive literature overview on the field of co-opetition

INTEGRATED ASSESSMENT MODELLING

integrated assessment

Evolutionary games on graphs

Game theory is one of the key paradigms behind many scientific disciplines from biology to behavioral sciences to economics. In its evolutionary form and especially when the interacting agents are linked in a specific social network the underlying solution concepts and methods are very similar to those applied in non-equilibrium statistical physics. This review gives a tutorial-type overview of the field for physicists. The first three sections introduce the necessary background in classical and evolutionary game theory from the basic definitions to the most important results. The fourth section surveys the topological complications implied by non-mean-field-type social network structures in general. The last three sections discuss in detail the dynamic behavior of three prominent classes of models: the Prisoner's Dilemma, the Rock-Scissors-Paper game, and Competing Associations. The major theme of the review is in what sense and how the graph structure of interactions can modify and enrich the picture of long term behavioral patterns emerging in evolutionary games.Comment: Review, final version, 133 pages, 65 figure

Strategic Action in the Liberalised German Electricity Market

Nowadays, a process can be observed in Germany where electricity producing and trading firms react to the electricity market liberalisation by merging market shares, since the year 2000, which reduces the number of suppliers and influences production and consumer prices. This paper discusses whether the liberalisation process will have positive or negative impacts on the environmental situation and whether this process together with a phase out of nuclear power can guarantee the intended improvement of environmental conditions without governmental regulation in Germany. This is done by modelling different strategic options of energy suppliers and their impacts on the economic and environmental situation in the liberalised German electricity market by a computational game theoretic model. Calculations with this model show that when German firms act strategically (e.g. a change in action of one firm affects the electricity price and, hence, the payoffs of other firms), the environment is better off at the cost of higher electricity prices. This result is robust to perturbations as shows by performing a sensitivity analysis.Electricity market liberalisation, game theoretic model, environmental effectiveness

How specificity and presentation of data affect our rational decision-making ability, oriented to a pharmaceutical perspective.

This dissertation aims to show the influence of factors on our perception and consequent evaluation of data, respectively our assessment of situations. Furthermore, it deals with the question to what extent rationally abstracted processes are common in the medical-pharmaceutical field. Overall, this dissertation indicates that limited evidence of abstracted approaches in the medical-pharmaceutical context can be found. Furthermore it is shown that drug evaluations, in particular the risk evaluation( even in itself) , are subject to strong subjective factors that distort the results.Ziel dieser Arbeit ist es, den Einfluss von Faktoren auf unsere Wahrnehmung und die daraus resultierende Bewertung von Daten und Situationen aufzuzeigen. Ergänzend, inwieweit rationale abstrahierte Prozesse im medizinisch-pharmazeutischen Bereich üblich sind. Insgesamt zeigt die Dissertation, dass abstrahierende Ansätze im medizinisch-pharmazeutischen Kontext nur in begrenztem Umfang zu finden sind. Außerdem wird gezeigt, dass Arzneimittelbewertungen, insbesondere die Risikobewertung (auch an sich), starken subjektiven Faktoren unterliegen, die die Ergebnisse verzerren

Applications of Negotiation Theory to Water Issues

The purpose of the paper is to review the applications of non-cooperative bargaining theory to water related issues – which fall in the category of formal models of negotiation. The ultimate aim is that to, on the one hand, identify the conditions under which agreements are likely to emerge, and their characteristics; and, on the other hand, to support policy makers in devising the “rules of the game” that could help obtain a desired result. Despite the fact that allocation of natural resources, especially of trans-boundary nature, has all the characteristics of a negotiation problem, there are not many applications of formal negotiation theory to the issue. Therefore, this paper first discusses the non-cooperative bargaining models applied to water allocation problems found in the literature. Particular attention will be given to those directly modelling the process of negotiation, although some attempts at finding strategies to maintain the efficient allocation solution will also be illustrated. In addition, this paper will focus on Negotiation Support Systems (NSS), developed to support the process of negotiation. This field of research is still relatively new, however, and NSS have not yet found much use in real life negotiation. The paper will conclude by highlighting the key remaining gaps in the literature.Negotiation theory, Water, Agreeements, Stochasticity, Stakeholders