The Design of Permit Schemes and Environmental Innovation
AbstractMost real world emission permit schemes are in effect hybrid instruments that feature both quantity and price controls. While the effects of price bounds are well understood for issues such as uncertain abatement costs it has not been investigated how such bounds affect time-consistency of environmental regulation and research incentives. The present paper analyzes these issues for two types of innovation. While price bounds increase static efficiency they reduce incentives to innovate. Commitment on details of a scheme’s design might be necessary to avoid the latter.
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Bibliographic InfoPaper provided by University of Heidelberg, Department of Economics in its series Working Papers with number 0467.
Length: 14 pages
Date of creation: Jun 2008
Date of revision: Jun 2008
Environmental Regulation; Hybrid Instruments; Innovation; Time-inconsistency;
Find related papers by JEL classification:
- Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-06-27 (All new papers)
- NEP-ENE-2008-06-27 (Energy Economics)
- NEP-ENV-2008-06-27 (Environmental Economics)
- NEP-INO-2008-06-27 (Innovation)
- NEP-MIC-2008-06-27 (Microeconomics)
- NEP-REG-2008-06-27 (Regulation)
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