The emergence of natural disasters induces a trade-off in the environmental insurance market. While firms need more coverage against large potential losses, the higher damage caused by accidents increases the cost of insurance. As a result, firms may choose to switch to resilient production, which reduces the severity of environmental damage and exempts the firm from paying an emissions tax. We study this problem in a duopoly industry where two risk-averse firms choose their type (resilient or non resilient) based on their production strategy, and their demand for insurance against financial losses caused by environmental accidents. Our results highlight a non-trivial interaction between insurance demand and technology choice: a resilient firm demands lower insurance coverage when the cost of implementing the resilient technology is relatively low. The emergence of natural disasters ultimately favours the adoption of resilient production methods.
This paper addresses the participation of independent aggregators (IAs) for demand response (DR) in European electricity markets. An IA is an aggregator trading the flexibility of consumers of which it [...]
The emergence of natural disasters induces a trade-off in the environmental insurance market. While firms need more coverage against large potential losses, the higher damage caused by accidents increases the [...]
Large-scale CO2 transport infrastructure is crucial for achieving decarbonization goals, yet its deployment remains slow. This paper maps emerging CO2 transport governance models across two dimensions: State-led policies and Economic [...]
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