Discussion and conclusion
We investigate the effect of sanctions on the evolution of cooperation in linear division of labor. As an example, we institute the replicator dynamics in the context of an industrial waste illegal dumping game proposed by Ohnuma and Kitakaji (2007). We introduce two sanction systems, the actor responsibility system and the producer responsibility system, and then compare each of these two systems with a baseline model devoid of sanctions. Our main conclusion is that both sanction systems seem to promote the evolution of cooperation and inhibit illegal dumping by generators. However, where fines do not influence evolutionary dynamics because monitoring is ineffective, the actor responsibility system no longer promotes the evolution of cooperation.
Monitoring violators is arduous not only in the case of illegal industrial waste but in other contexts too, such as illegal logging and overfishing. The industrial waste treatment process in Japan embodies linear division of labor; and the sanction system which does not require monitoring violators can be put into practice rather than the sanction system with monitoring. Our analysis also shows that the producer responsibility system, which does not require monitoring, promotes the evolution of cooperation and inhibits illegal dumping more than the actor responsibility system. If logging or fishing in some areas are configured according to linear division of labor, sanction systems like the producer responsibility system may work to inhibit illegal logging or overfishing.
In the producer responsibility system, the generator is sanctioned if the manifest is not handed to the local administrative organ. There is another possible sanction system derived from the producer responsibility system; not a generator but an intermediate treatment facility or a landfill site is punished when the manifest is not handed to the local administrative organ. However, generators are expected to choose illegal dumping more if intermediate treatment facilities or landfill sites are punished, and then the amount of illegal dumping is larger. It is because g-defectors do not need to pay not only the cost of cooperation but also the fine. To confirm our guess, we will analyze the model with the new sanction system as our future study.