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Adoption of a cleaner technology by a monopoly under incomplete information

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  • Slim Ben Youssef

    ()
    (Ecole Supérieure de Commerce de Tunis)

Abstract

We consider a monopolistic firm producing a good while polluting. This firm can adopt a cleaner technology within a finite time by incurring an investment cost decreasing exponentially with the adoption date. The firm is induced to adopt the cleaner technology at the socially optimal date by an appropriate innovation subsidy. In the incomplete information context, the firm has private information concerning the cost of acquiring new technology. Interestingly, the regulator can induce the firm to reveal the true value of its private information by a contract consisting of an adoption date which is increasing with the value of the innovation cost parameter announced by the firm, and a R&D subsidy which is decreasing with the value of the innovation cost parameter announced by the firm. Nevertheless, the socially optimal adoption date of incomplete information is delayed with respect to the complete information one.

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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 30 (2010)
Issue (Month): 1 ()
Pages: 734-743

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Handle: RePEc:ebl:ecbull:eb-10-00036

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Keywords: cleaner technology; adoption date; R&D subsidy; incomplete information.;

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  1. Laffont, Jean-Jacques, 1992. "The New Economics of Regulation Ten Years After," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 22, Institut d'Économie Industrielle (IDEI), Toulouse.
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Cited by:
  1. Ben Youssef, Slim, 2010. "Adoption of a clean technology using a renewable energy," MPRA Paper 25576, University Library of Munich, Germany.
  2. Ben Youssef, Slim, 2010. "Timing of adoption of clean technologies by regulated monopolies," MPRA Paper 42470, University Library of Munich, Germany, revised Sep 2012.

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