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Environmental options and technological innovation: an evolutionary game model

Author

Listed:
  • Angelo Antoci

    (Universita' degli Studi di Sassari)

  • Simone Borghesi

    () (Universita' degli Studi di Siena)

  • Marcello Galeotti

    () (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.

Suggested Citation

  • Angelo Antoci & Simone Borghesi & Marcello Galeotti, 2009. "Environmental options and technological innovation: an evolutionary game model," Working Papers - Mathematical Economics 2009-04, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
  • Handle: RePEc:flo:wpaper:2009-04
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    References listed on IDEAS

    as
    1. Jorgen W. Weibull, 1997. "Evolutionary Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262731215, January.
    2. Perrings, Charles, 1989. "Environmental bonds and environmental research in innovative activities," Ecological Economics, Elsevier, vol. 1(1), pages 95-110, February.
    3. Perrings,Charles, 1987. "Economy and Environment," Cambridge Books, Cambridge University Press, number 9780521340816, December.
    4. Costanza, Robert & Perrings, Charles, 1990. "A flexible assurance bonding system for improved environmental management," Ecological Economics, Elsevier, vol. 2(1), pages 57-75, April.
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    Citations

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    Cited by:

    1. Angelo Antoci & Marcello Galeotti & Davide Radi, 2011. "Financial tools for the abatement of traffic congestion: a dynamical analysis," Working Papers - Mathematical Economics 2011-01, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    2. Wood, Aaron D. & Mason, Charles F. & Finnoff, David, 2016. "OPEC, the Seven Sisters, and oil market dominance: An evolutionary game theory and agent-based modeling approach," Journal of Economic Behavior & Organization, Elsevier, vol. 132(PB), pages 66-78.
    3. Esther Blanco & Javier Lozano, 2015. "Ecolabels, uncertified abatement, and the sustainability of natural resources: an evolutionary approach," Journal of Evolutionary Economics, Springer, vol. 25(3), pages 623-647, July.
    4. Angelo Antoci & Marcello Galeotti & Davide Radi, 2011. "Financial Tools for the Abatement of Traffic Congestion: A Dynamical Analysis," Computational Economics, Springer;Society for Computational Economics, vol. 38(3), pages 389-405, October.

    More about this item

    Keywords

    environmental bonds; call and put options; technological innovation; evolutionary dynamics;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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