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A note on environmental policy and innovation when governments cannot commit

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  • Montero, Juan Pablo
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    Abstract

    It is widely accepted that one of the most important characteristics of an effective pollution control policy is to provide firms with credible incentives to make long-run investments in R&D that can drastically reduce pollution. Recognizing that a government may be tempted to revise its policy design after innovations become available, this note shows how the performance of two policy instruments—prices (uniform taxes) and quantities (tradeable pollution permits)—differ in such a setting. I also discuss the gains from combining either instrument with subsidies to adopting firms.

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    Bibliographic Info

    Article provided by Elsevier in its journal Energy Economics.

    Volume (Year): 33 (2011)
    Issue (Month): S1 ()
    Pages: S13-S19

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    Handle: RePEc:eee:eneeco:v:33:y:2011:i:s1:p:s13-s19

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    Web page: http://www.elsevier.com/locate/eneco

    Related research

    Keywords: Innovation; Pollution; Commitment;

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    Cited by:
    1. Alistair Ulph & David Ulph, 2013. "Optimal Climate Change Policies When Governments Cannot Commit," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 56(2), pages 161-176, October.
    2. David Tobón Orozco & Carlos Andrés Vasco Correa, 2011. "Un modelo de equilibrio general con externalidades y capital natural," Libros del Grupo Microeconomía Aplicada, Universidad de Antioquia, Departamento de Economía, edition 1, number 01, December.
    3. Wirl, Franz, 2014. "Taxes versus permits as incentive for the intertemporal supply of a clean technology by a monopoly," Resource and Energy Economics, Elsevier, vol. 36(1), pages 248-269.
    4. Taran Fæhn & Elisabeth Thuestad Isaksen, 2014. "Diffusion of climate technologies in the presence of commitment problems," Discussion Papers 768, Research Department of Statistics Norway.
    5. Aalbers, Rob & Shestalova, Victoria & Kocsis, Viktória, 2013. "Innovation policy for directing technical change in the power sector," Energy Policy, Elsevier, vol. 63(C), pages 1240-1250.
    6. Idrissa Sibailly, 2013. "On licensing and diffusion of clean technologies in oligopoly," Working Papers hal-00911453, HAL.

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