Edoardo Faletti, Giovanni Messina, Marco Tolini

Computer Science, Simulation and Economics

Project work on

"A Tradable Pollution Market "


The applet requires Java 1.4.1 or higher to run. It will not run on Windows 95 or Mac OS 8 or 9. Mac users must have OS X 10.2.6 or higher and use a browser that supports Java 1.4 applets (Safari works, IE does not). On other operating systems, you may obtain the latest Java plugin from Sun's Java site.

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view/download model file: permessi_negoziabili2.nlogo

This project deals with environmental and pollution topics as an externality. The Legislator, who doesn’t know the pollution pulling down costs of every factory, decides to create a tradable pollution market. This solution permits to minimize the total costs of the manufacturing system.

We represents the companies with red patches and the tradable permits with turtles characterized by factory shape. The permits are vertically drew up in columns on their own companies. The factories have different colours:

White -> the necessary amount of permits to cover the produced pollution
Red -> extra permits compared to the amount of pollution
Green -> extra permits offered to the market.

1) Before to play the SETUP it is possible to modify the following parameters with the appropriate sliders:

PROD-WEIGHT-ON-POLLUTION: production weight on pollution level
TECHLEV-WEIGHT-ON-POLLUTION: technical level weight on pollution
PROD-WEIGHT-ON-COST: production weight on costs level
TOGROUPOF: the amount of permits which are grouped in coloums
NUMBER-FACTORIES: the number of companies which are simulated
LIMIT: time to depreciate the value of permits
PERCENTAGEVARIATION: percentage variation of the permits abatement power
SLOW: if it is “on” slows down the turtles movements
VARIABLEMARKET: if it is “on” makes the trend of the market variable

2) Playing SETUP we create the factories the initial distribution of the permits and the first cycle of the production.

3) Playing GO the companies produce, exchange the permits while years pass.

3.b) Alternatively it’s possible to play EXCHANGE and STEP: the first one makes possible to exchange the permits, the second one updates the variables at the end of every year.

It’s interesting to modify the values of the sliders in order to compare the different behaviours of the factories regarding production and permits trade.

The model can be improved in different ways in order to show in a more accurate and realistic manner the market and the factories. In particular, companies use different strategies in different contests and competitors. It could be interesting to change the algorithm which improve the technical skills, from exogenous to endogenous

Graphically this simulation is inspired from "Ospedali" by Professor Pietro Terna University of Turin.

This simulation was created during the course “Informatica e Simulazione per l'Economia” (2004 – 2005) by Professor Pietro Terna, University of Turin. The autors of the model are Edoardo Faletti (edoardofaletti@hotmail.com), Giovanni Messina (giovanni.m@fastwebnet.it), Marco Tolini (marcotolini@tin.it), with the supervision of Professor Pietro Terna, who we thanks heartily.