IDEAS home Printed from
   My bibliography  Save this paper

Environmental protection mechanisms and technological dynamics


  • Antoci, Angelo
  • Borghesi, Simone
  • Russu, Paolo


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.

Suggested Citation

  • Antoci, Angelo & Borghesi, Simone & Russu, Paolo, 2011. "Environmental protection mechanisms and technological dynamics," MPRA Paper 36597, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:36597

    Download full text from publisher

    File URL:
    File Function: original version
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. Jessica Coria & Magnus Hennlock, 2012. "Taxes, permits and costly policy response to technological change," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(1), pages 35-60, January.
    2. Di Vita, Giuseppe, 2009. "Legal families and environmental protection: Is there a causal relationship?," Journal of Policy Modeling, Elsevier, vol. 31(5), pages 694-707, September.
    3. Montgomery, W. David, 1972. "Markets in licenses and efficient pollution control programs," Journal of Economic Theory, Elsevier, vol. 5(3), pages 395-418, December.
    4. Perrings, Charles, 1989. "Environmental bonds and environmental research in innovative activities," Ecological Economics, Elsevier, vol. 1(1), pages 95-110, February.
    5. Antoci, Angelo & Galeotti, Marcello & Geronazzo, Lucio, 2007. "Visitor and firm taxes versus environmental options in a dynamical context," MPRA Paper 13667, University Library of Munich, Germany.
    6. Bartolini, Stefano & Bonatti, Luigi, 2002. "Environmental and social degradation as the engine of economic growth," Ecological Economics, Elsevier, vol. 43(1), pages 1-16, November.
    7. Perrings,Charles, 1987. "Economy and Environment," Cambridge Books, Cambridge University Press, number 9780521340816, May.
    8. Bartolini, Stefano & Bonatti, Luigi, 2003. "Undesirable growth in a model with capital accumulation and environmental assets," Environment and Development Economics, Cambridge University Press, vol. 8(01), pages 11-30, February.
    9. Antoci, Angelo & Bartolini, Stefano, 1999. "Negative externalities as the engine of growth in an evolutionary context," MPRA Paper 13908, University Library of Munich, Germany.
    10. Costanza, Robert & Perrings, Charles, 1990. "A flexible assurance bonding system for improved environmental management," Ecological Economics, Elsevier, vol. 2(1), pages 57-75, April.
    11. Angelo Antoci & Simone Borghesi & Marcello Galeotti, 2008. "Should we replace the environment?: Limits of economic growth in the presence of self-protective choices," International Journal of Social Economics, Emerald Group Publishing, vol. 35(4), pages 283-297, March.
    12. Angelo Antoci & Simone Borghesi, 2010. "Environmental degradation, self-protection choices and coordination failures in a North–South evolutionary model," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 5(1), pages 89-107, June.
    13. Requate, Till, 2005. "Dynamic incentives by environmental policy instruments--a survey," Ecological Economics, Elsevier, vol. 54(2-3), pages 175-195, August.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Angelo Antoci & Simone Borghesi & Gerardo Marletto, 2012. "To drive or not to drive? A simple evolutionary model," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2012(2), pages 31-47.
    2. Lu, Jianjun & Tokinaga, Shozo, 2014. "Estimation of state changes in system descriptions for dynamic Bayesian networks by using a genetic procedure and particle filters," Economic Modelling, Elsevier, vol. 39(C), pages 138-145.

    More about this item


    environmental protection; financial instruments; technological innovation; evolutionary dynamics;

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:36597. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.