Tourism investments under uncertainty: an economic analysis of "eco-monsters"

• Guido Candela ^[1] ; Massimiliano Castellani ^[1] ; Maurizio Mussoni ^[1]
  1. [1] University of Bologna

     University of Bologna

     Bolonia, Italia

     
• Localización: Tourism economics: the business and finance of tourism and recreation, ISSN 1354-8166, Vol. 15, Nº. Extra 3, 2009 (Ejemplar dedicado a: Modern approaches in tourism economics and econometrics), págs. 671-688
• Idioma: inglés
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• Resumen

  • 'Ecological monsters' can be the legal outcome of rational choices made by three players: a firm, a policymaker and Nature. The firm asks the local policymaker for permission to undertake a real investment project in a stochastic framework, with real options and environmental externalities. The model consists of a non-cooperative game and its solution implies a bizarre outcome, both for the firm when it interrupts and abandons the investment project and for the policymaker when it is unable to avoid eco-monsters. Policy implications and partisan effects are explored.