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Tourism Investments under Uncertainty: An Economic Analysis of ‘Eco-Monsters’

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  • Guido Candela
  • Massimiliano Castellani
  • Maurizio Mussoni

Abstract

‘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.

Suggested Citation

  • Guido Candela & Massimiliano Castellani & Maurizio Mussoni, 2009. "Tourism Investments under Uncertainty: An Economic Analysis of ‘Eco-Monsters’," Tourism Economics, , vol. 15(3), pages 671-688, September.
    • Handle: RePEc:sae:toueco:v:15:y:2009:i:3:p:671-688
    DOI: 10.5367/000000009789036639
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    References listed on IDEAS

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