EconPapers    
Economics at your fingertips  
 

Environmental protection mechanisms and technological dynamics

Angelo Antoci, Simone Borghesi () and Paolo Russu ()

MPRA Paper from University Library of Munich, Germany

Abstract: The paper proposes a new financial mechanism that could be implemented to protect the environment of a tourist region. For this purpose, we investigate the potential consequences of two financial activities, issued by the local government (\emph{G}) of a region\emph{\ R}, which work like contracts between \emph{G} and, respectively, visitors of\emph{\ R }and firms operating in\emph{\ R}. According to these contracts, agents who decide to visit \emph{R }(firms that decide to adopt an environmental friendly technology) have to buy an option that entitle them to get a partial or total reimbursement if environmental quality in \emph{R} turns out to be sufficiently low (high), namely, below (above) a given predetermined threshold level. Using a two-population evolutionary game model, we analyze the dynamics emerging from the model and prove that under such fund rising mechanism the virtuous equilibrium (in which all firms adopt the pollution-free technology and all agents choose to visit the region) is always locally attractive. Furthermore, we show that the attraction basin of the poverty trap equilibrium (in which no firm adopts the clean technology and no tourist comes the region) can be decreased by raising the reimbursement offered by the local government to the visitors. Finally, using numerical simulations, it can be shown that the dynamics of the model may give rise to another attractive stationary state in correspondence of the environmental quality threshold determined by the government, as well as to a limit cycle that oscillates around the threshold.

Keywords: environmental protection; financial instruments; technological innovation; evolutionary dynamics (search for similar items in EconPapers)
JEL-codes: Q56 C73 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/36597/1/MPRA_paper_36597.pdf original version (application/pdf)

Related works:
Journal Article: Environmental protection mechanisms and technological dynamics (2012) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:36597

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().

 
Page updated 2020-07-09
Handle: RePEc:pra:mprapa:36597