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Taxes, permits and costly policy response to technological change

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  • Jessica Coria

    ()

  • Magnus Hennlock

    ()

Abstract

In this paper we analyze the e ects of the choice of price (taxes) versus quantity (tradable permits) instruments on the policy response to technological change. We show that if policy responses incur transactional and political adjustment costs, environmental targets are less likely to be adjusted under tradable per- mits than under emission taxes. This implies that the total level of abatement over time might remain unchanged under tradable permits while it will increase under emission taxes.

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Bibliographic Info

Article provided by Society for Environmental Economics and Policy Studies - SEEPS in its journal Environmental Economics and Policy Studies.

Volume (Year): 14 (2012)
Issue (Month): 1 (January)
Pages: 35-60

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Handle: RePEc:spr:envpol:v:14:y:2012:i:1:p:35-60

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Related research

Keywords: Environmental taxes; Tradable permits; Technology adoption; Policy adjustment; Regulatory costs; H82; O32; O33; Q52; Q55; Q58;

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References

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  1. Downing, Paul B. & White, Lawrence J., 1986. "Innovation in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 13(1), pages 18-29, March.
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  3. 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.
  4. Gersbach, Hans & Glazer, Amihai, 1999. "Markets and Regulatory Hold-Up Problems," Journal of Environmental Economics and Management, Elsevier, vol. 37(2), pages 151-164, March.
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  6. Jung, Chulho & Krutilla, Kerry & Boyd, Roy, 1996. "Incentives for Advanced Pollution Abatement Technology at the Industry Level: An Evaluation of Policy Alternatives," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 95-111, January.
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  12. Coria, Jessica, 2009. "Taxes, permits, and the diffusion of a new technology," Resource and Energy Economics, Elsevier, vol. 31(4), pages 249-271, November.
  13. Juan-Pablo Montero, 2002. "Market Structure and Environmental Innovation," Documentos de Trabajo 215, Instituto de Economia. Pontificia Universidad Católica de Chile..
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  17. Till Requate & Wolfram Uunold, 2001. "On the Incentives Created by Policy Instruments to Adopt Advanced Abatement Technology if Firms are Asymmetric," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 157(4), pages 536-, December.
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Cited by:
  1. Antoci, Angelo & Borghesi, Simone & Russu, Paolo, 2011. "Environmental protection mechanisms and technological dynamics," MPRA Paper 36597, University Library of Munich, Germany.
  2. Thierry Bréchet & Sylvette Ly, 2013. "The many traps of green technology promotion," Environmental Economics and Policy Studies, Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(1), pages 73-91, January.

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