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Timing of Adoption of Clean Technologies by Regulated Monopolies

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  • Slim Ben Youssef

Abstract

We consider a monopoly firm producing a good and, at the same time, polluting and using fossil energy. By incurring an investment cost, this firm can adopt a lower production cost clean technology using renewable energy. We determine the optimal adoption date for the firm in the case where it is not regulated at all and in the case where it is regulated at each period. Interestingly, the regulated firm adopts the clean technology earlier than what is socially optimal, as opposed to the nonregulated firm. The regulator can induce the firm to adopt the clean technology at the socially optimal date by a postpone adoption subsidy. Nevertheless, the regulator may be interested in the earlier adoption of the firm to encourage the diffusion of the use of clean technologies in other industries. Key words: Static regulation, Clean technology, Renewable energy, Adoption date.JEL: D62, H57, Q42, Q55.

Suggested Citation

  • Slim Ben Youssef, 2015. "Timing of Adoption of Clean Technologies by Regulated Monopolies," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(1), pages 77-92.
    • Handle: RePEc:voj:journl:v:62:y:2015:i:1:p:77-92:id:43
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    More about this item

    Keywords

    Static regulation; Clean technology; Renewable energy; Adoption date;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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