Timing and Commitment of Environmental Policy,Adoption of New Technology,and Repercussions on R&;D |
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Authors: | Email author" target="_blank">Till?RequateEmail author |
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Institution: | (1) Department of Economics, Kiel University, Olshausenstrasse 40, 24098 Kiel, Germany |
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Abstract: | We investigate the interplay between environmental policy, incentives to adoptnew technology, and repercussions on R&D. We study a model where a monopolistic upstream firm engages in R&D and sells advanced
abatement technology to polluting downstream firms. We consider four different timing and commitment regimes of environmental
tax and permit policies: ex post taxation (or issuing permits), interim commitment to a tax rate (a quota of permits) after
observing R&D success but before adoption, and finally two types of ex antecommitment before R&D activity, one with a unique tax rate (quota of permits), the other one with a menu of tax rates (permit
quotas). We study the second best tax and permit policies and rank these with respect to welfare. In particular, we find that
commitment to a menu of tax rate dominates all other policy regimes. |
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Keywords: | commitment emission taxes environmental policy R& D technology adoption time consistency tradeable permits |
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