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On the Incentives Created by Policy Instruments to Adopt Advanced Abatement Technology if Firms are Asymmetric

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  • Till Requate
  • Wolfram Uunold

Abstract

The paper investigates the incentives created by environmental policy instruments to adopt cleaner technology. In a framework with many asymmetric firms we show that, if the regulator has committed to a certain aggregate emission level before the new technology was available, taxes lead to overinvestment, while both auctioned and free permits lead to underinvestment. If, however, the regulator knows the new technology, he is able to induce the socially optimal degree of adoption independently of whether he moves before or after adoption.

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Bibliographic Info

Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.

Volume (Year): 157 (2001)
Issue (Month): 4 (December)
Pages: 536-

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Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200112)157:4_536:oticbp_2.0.tx_2-x

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Cited by:
  1. Jessica Coria & Magnus Hennlock, 2012. "Taxes, permits and costly policy response to technological change," Environmental Economics and Policy Studies, Society for Environmental Economics and Policy Studies - SEEPS, vol. 14(1), pages 35-60, January.
  2. Arguedas, Carmen, 2010. "Pollution Standards, Technology Investment and Fines for Non-Compliance," Working Papers in Economic Theory 2010/05, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
  3. Fischer, Carolyn, 2008. "Emissions pricing, spillovers, and public investment in environmentally friendly technologies," Energy Economics, Elsevier, vol. 30(2), pages 487-502, March.
  4. Coria, Jessica, 2011. "Environmental crises' regulations, tradable permits and the adoption of new technologies," Resource and Energy Economics, Elsevier, vol. 33(3), pages 455-476, September.
  5. Fischer, Carolyn & Newell, Richard G., 2008. "Environmental and technology policies for climate mitigation," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 142-162, March.
  6. Dagmar Nelissen & Till Requate, 2007. "Pollution-reducing and resource-saving technological progress," International Journal of Agricultural Resources, Governance and Ecology, Inderscience Enterprises Ltd, vol. 6(1), pages 5-44.
  7. Coria, Jessica, 2009. "Unintended Impacts of Multiple Instruments on Technology Adoption," Discussion Papers dp-09-06-efd, Resources For the Future.
  8. Requate, Till, 2005. "Environmental Policy under Imperfect Competition : A Survey," Economics Working Papers 2005,12, Christian-Albrechts-University of Kiel, Department of Economics.
  9. Alfred Endres & Bianca Rundshagen, 2013. "Incentives to Diffuse Advanced Abatement Technology Under the Formation of International Environmental Agreements," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 56(2), pages 177-210, October.
  10. Perino, Grischa & Requate, Till, 2012. "Does more stringent environmental regulation induce or reduce technology adoption? When the rate of technology adoption is inverted U-shaped," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 456-467.
  11. Eva Camacho-Cuena & Till Requate & Israel Waichman, 2012. "Investment Incentives under Emission Trading: An Experimental Study," Working Papers 2012/22, Economics Department, Universitat Jaume I, Castellón (Spain).
  12. von Döllen, Andreas & Requate, Till, 2007. "Environmental Policy and Incentives to Invest in Advanced Abatement Technology if Arrival of Future Technology is Uncertain - Extended Version," Economics Working Papers 2007,04, Christian-Albrechts-University of Kiel, Department of Economics.
  13. Clara Villegas-Palacio & Jessica Coria, 2010. "On the interaction between imperfect compliance and technology adoption: taxes versus tradable emissions permits," Journal of Regulatory Economics, Springer, vol. 38(3), pages 274-291, December.
  14. Villegas, Clara & Coria, Jessica, 2009. "Taxes, Permits, and the Adoptation of Abatement Technology under Imperfect Compliance," Discussion Papers dp-09-20-efd, Resources For the Future.

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