Green transition and environmental quality: an evolutionary approach

Abstract We propose a model for exploring the feasibility and effectiveness of green transition from dirty to clean technologies. It relies on an evolutionary framework technology selection that accounts environmental domain dynamics, in terms pollution evolution. A regulator charges tax producers, agents can choose between less profitable more one, which, however, is taxed greater extent with respect one. The depends endogenously level pollution, which rises because producers’ emissions. stock also naturally decays, be abated by involving resources collected taxation. analytically study resulting two-dimensional both statically dynamically, understand under what conditions take place results improvement quality. show excessive over-taxation may not beneficial, as steady state increase above certain taxation threshold multiple states emerge. Moreover, dynamics result persistent endogenous oscillations systematically lead significant levels. Finally, we discuss economic rationale light possible policy suggestions.