Optimal Interventions in Coupled-Activity Network Games: Application to Sustainable Forestry
| Autor: | Parasnis, Rohit, Amin, Saurabh |
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| Rok vydání: | 2024 |
| Předmět: | |
| Druh dokumentu: | Working Paper |
| Popis: | We consider the problem of promoting sustainability in production forests wherein a given number of strategic entities are authorized to manage concession regions. These entities harvest agricultural commodities and sell them in a market. We study optimal price-shaping in a coupled activity network game model in which the concession managers (agents) engage in two activities: (a) sustainable production of commodities, which does not interfere with protected forest resources, and (b) unsustainable production, which involves infringing into protected regions to expand their agricultural footprint. Using a network game model that accounts for both intra-activity and cross-activity agent-to-agent interactions, we design pricing policies that incentivize the agents to either increase their sustainable effort or reduce their unsustainable effort by addressing the NP-hard problem of welfare maximization subject to budget constraints and tolerance constraints on the aggregate level of unsustainable effort at equilibrium. We then consider a problem variant that involves region-wise uniform pricing and another that proposes price redistribution via a combination of penalties and sustainability premiums. We obtain closed-form expressions for the optimal policies for multiple cases of practical significance, and our results show that it is possible to achieve the goals of welfare maximization and unsustainable effort reduction simultaneously without reducing any agent's individual utility, even in situations in which the planner has zero external budget for offering premium raises. Our empirical analyses, performed using real data for the case of palm oil cultivation in Indonesia, validate our theoretical results and yield novel insights for guiding the design of price-shaping policies in practice. Comment: 26 pages, 7 figures |
| Databáze: | arXiv |
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