English, Article, Journal or magazine article edition: Tourism Investments Under Uncertainty: an Economic Analysis of “Eco-monsters” Guido Candela; Massimiliano Castellani; Maurizio Mussoni

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Bookmark: http://trove.nla.gov.au/version/145333
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Tourism Investments Under Uncertainty: an Economic Analysis of “Eco-monsters”
Author
  • Guido Candela
  • Massimiliano Castellani
  • Maurizio Mussoni
Physical Description
  • preprint
Notes
  • “Ecological monsters” (“eco-monsters”) can be the bizarre, but legal, outcome of rational choices made by two agents: (i) a firm whose investments depend on Governmental permits; (ii) a policy maker having the discretionary power on the permits. This paper will determine the existence conditions which create a legal “eco-monster”. The model consists of a sequential noncooperative game with equilibrium in terms of positive expected firm profits and policy maker net balance ending up with a non-zero-sum game and a double failure: (i) a market failure, when the firm interrupts and abandons the investment, and (ii) a public failure, when the policy maker can not avoid the creation of “eco-monsters”. Policy implications and partisan party effects are explored: for certain parameters values, the economic policy can be ineffective in decreasing the “ecomonsters” frequency as a paradoxical, but rational, outcome in a stochastic framework, with real options and environmental externalities. JEL Classifications: C72-D62-D73
  • Noncooperative Games, Externalities, Real Options.
  • RePEc:rim:rimwps:07-08
Language
  • English
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