Environmental options and technological innovation: an evolutionary game model

Angelo Antoci, Simone Borghesi () and Marcello Galeotti ()
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Angelo Antoci: Universita' degli Studi di Sassari
Marcello Galeotti: Dipartimento di Matematica per le Decisioni, Universita' degli Studi di Firenze

No 2009-04, DiMaD Working Papers from Dipartimento di Matematica per le Decisioni, Universita' degli Studi di Firenze

Abstract: This paper analyzes the effects on economic agents’ behaviour of an innovative environmental protection mechanism that the Public Administration of a tourist region may adopt to attract visitors while protecting the environment. On the one hand, the Public Administration sells to the tourists an environmental call option that gives them the possibility of being (partially or totally) reimbursed if the environmental quality in the region turns out to be unsatisfactory (i.e. below a given threshold level). On the other hand, it offers the firms that adopt an innovative, non-polluting technology an environmental put option that allows them to get a reimbursement for the additional costs imposed by the new technology if the environmental quality is sufficiently good (i.e. above the threshold level).The aim of the paper is to study the dynamics that arises with this financial mechanism from the interaction between the economic agents and the Public Administration in an evolutionary game context.

Keywords: environmental bonds; call and put options; technological innovation; evolutionary dynamics (search for similar items in EconPapers)
JEL-codes: C73 H23 Q55 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env, nep-evo and nep-tur
Date: 2009-10
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