Incentives to adopt new technologies under different pollution-control policies |
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Authors: | Till Requate |
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Institution: | (1) Institute of Mathematical Economics, University of Bielefeld, P.O. Box 100131, 33501 Bielefeld, Germany |
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Abstract: | The paper investigates the incentives for polluting firms to adopt new technologies under pollution-control policies such as effluent taxes and auctioned permits. We pay explicit attention to the output market. Firms can choose among two types of technologies, a conventional one with high marginal abatement costs and a new one with low margainl abatement costs but higher fixed costs. We find that taxes almost always induce complete adoption or no adoption at all. Permits, in contrast, allow for partial adoption. Moreover, ex post, permits can always induce first best, whereas taxes cannot if partial adoption is socially optimal. |
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Keywords: | emission taxes auctioned permits adoption of new technology |
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