Environmental regulation, technological diversity, and the dynamics of technological change |
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Authors: | Frank C Krysiak |
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Institution: | Department of Business and Economics, University of Basel, Peter Merian-Weg 6, 4002 Basel, Switzerland |
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Abstract: | Inducing technological progress is an important objective of environmental regulation. We investigate under which conditions regulation-induced technological progress pursues the best technological option. We analyze a setting with vertical and horizontal technological progress, cost uncertainty, time-limited patent protection, and a case that is typical for some emissi4on-intensive industries, like electricity generation or the chemical industry. Under taxes and standards, only the current least-cost technology is used and developed, implying a lock-in into a possibly inferior technology. Tradable permits yield slower progress but can facilitate the simultaneous development of technologies, rendering lock-ins less likely. |
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Keywords: | Technological change Regulation R& D Technological diversity Uncertainty Investment |
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