Financing the adoption of environment preserving technologies via innovative financial instruments: an evolutionary game approach

The main objective of the paper is to analyze the effects on economic agents’ behavior deriving from the introduction of an environmental protection mechanism that allows the exchange of financial activities among visitors of a region R, firms operating in the region R and the Public Administration. The resulting “financial market” is regulated by the Public Administration, but mainly fuelled by the interests of firms and visitors. The aim of the paper is to study the dynamics that arise in such a financial market from the interaction between the economic agents and the Public Administration. The evolution of visitors and firms’ behavior is modeled using the so-called replicator dynamics, according to which a given choice spreads among the population as long as its expected payoff is greater than the average payoff. From the model it emerges that such a dynamics may lead to a welfare-improving attractive Nash equilibrium in which all firms adopt the environmental-friendly technology.