Environmental Options and Technological Innovation: An Evolutionary Game Model

25 Pages Posted: 30 Nov 2009

See all articles by Simone Borghesi

Simone Borghesi

University of Siena - Dept. of Political and International Sciences; European University Institute

Angelo Antoci

University of Sassari

Marcello Galeotti

University of Florence - Department of Mathematics for Decisions

Date Written: November 30, 2009

Abstract

This paper analyses 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 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 above the threshold level. The aim of the paper is to study the dynamics that arise 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

JEL Classification: C73, D62, G10, O30, Q28

Suggested Citation

Borghesi, Simone and Antoci, Angelo and Galeotti, Marcello, Environmental Options and Technological Innovation: An Evolutionary Game Model (November 30, 2009). FEEM Working Paper No. 90.2009, Available at SSRN: https://ssrn.com/abstract=1515701 or http://dx.doi.org/10.2139/ssrn.1515701

Simone Borghesi (Contact Author)

University of Siena - Dept. of Political and International Sciences ( email )

via Mattioli, 10
I-53100 Siena
Italy

European University Institute ( email )

Villa Schifanoia
133 via Bocaccio
Firenze (Florence), Tuscany 50014
Italy

HOME PAGE: http://https://me.eui.eu/simone-borghesi

Angelo Antoci

University of Sassari ( email )

Piazza Universita
Sassari, 07100
Italy

Marcello Galeotti

University of Florence - Department of Mathematics for Decisions ( email )

Via Lombroso 6/17
Florence
Italy

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