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The effects of environmental policies on the abatement investment decisions of a green firm

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  • Saltari, Enrico
  • Travaglini, Giuseppe

Abstract

Abstract This paper focuses on environmental policies aimed at rising investment in pollution abatement capital. We assume that ecological uncertainty, i.e., uncertainty over the dynamics of pollution, affects firm investment decisions. Capital irreversibility is not postulated but endogenized using a quadratic adjustment cost function. Using this framework, we study the effects of environmental policies considering taxes on polluting inputs and subsidies to reduce the cost of abatement capital. Environmental policies promoted to enforce abatement capital may generate the unexpected result of reducing the abatement investment rate.

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Bibliographic Info

Article provided by Elsevier in its journal Resource and Energy Economics.

Volume (Year): 33 (2011)
Issue (Month): 3 (September)
Pages: 666-685

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Handle: RePEc:eee:resene:v:33:y:2011:i:3:p:666-685

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Web page: http://www.elsevier.com/locate/inca/505569

Related research

Keywords: Pollution externality Ecological uncertainty Irreversibility Investment decisions Environmental policy;

References

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Citations

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Cited by:
  1. Agliardi, Elettra & Sereno, Luigi, 2012. "Environmental protection, public finance requirements and the timing of emission reductions," Environment and Development Economics, Cambridge University Press, vol. 17(06), pages 715-739, December.
  2. E. Agliardi & L. Sereno, 2012. "On the optimal timing of switching from non-renewable to renewable resources: dirty vs clean energy sources and the relative efficiency of generators," Working Papers wp855, Dipartimento Scienze Economiche, Universita' di Bologna.
  3. Travaglini, Giuseppe & Saltari, Enrico, 2012. "A model of waste control and abatement capital: Permanent versus temporary environmental policies," MPRA Paper 36522, University Library of Munich, Germany.
  4. Enrico Saltari & Giuseppe Travaglini, 2013. "Optimal Waste Control with Abatement and Productive Capital Stocks," Working Papers 1301, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2013.
  5. Travaglini, Giuseppe & Rugiero, Serena, 2011. "Efficienza energetica: misurazioni e impatti
    [Energy efficiency: measurement and impacts]
    ," MPRA Paper 34520, University Library of Munich, Germany.
  6. Saltari, Enrico & Travaglini, Giuseppe, 2011. "Optimal abatement investment and environmental policies under pollution uncertainty," MPRA Paper 35072, University Library of Munich, Germany.
  7. Giuseppe Travaglini, 2012. "Pollution control: targets and dynamics," Working Papers 1201, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2012.

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