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The Adoption of Energy Efficiency Enhancing Technologies

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  • Erik Verhoef

    ()

  • Peter Nijkamp

    ()
    (Vrije Universiteit Amsterdam)

Abstract

This paper analyses the adoption of energy-efficiency enhancing technologies by heterogeneous firms. The fact that energy use does not only cause external environmental costs through pollution, but also directly affects the profitability of the firm and hence its behaviour on input and output markets is taken for granted. It is demonstrated that the consideration of such market processes may have important implications for the efficiency of environmental policies concerned with energy use. The analysis focuses in particular on the efficiency of the market-led adoption and diffusion process under variouspolicy regimes. It is shown that the promotion of energy-efficiency enhancing technologies might have unexpected effects in that it could lead to an increase in energy use, while the use of energy taxes might actually reduce the attractiveness of energy-saving technologies.

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File URL: http://papers.tinbergen.nl/97077.pdf
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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 97-077/3.

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Date of creation: 02 Aug 1997
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Handle: RePEc:dgr:uvatin:19970077

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Web page: http://www.tinbergen.nl

Related research

Keywords: environmental regulation; energy; adoption of technologies; heterogeneous firms; externalities;

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References

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  1. Malueg, David A., 1989. "Emission credit trading and the incentive to adopt new pollution abatement technology," Journal of Environmental Economics and Management, Elsevier, vol. 16(1), pages 52-57, January.
  2. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521311120.
  3. Jaffe, Adam B. & Stavins, Robert N., 1994. "The energy paradox and the diffusion of conservation technology," Resource and Energy Economics, Elsevier, Elsevier, vol. 16(2), pages 91-122, May.
  4. Howarth, Richard B. & Andersson, Bo, 1993. "Market barriers to energy efficiency," Energy Economics, Elsevier, Elsevier, vol. 15(4), pages 262-272, October.
  5. Milliman, Scott R. & Prince, Raymond, 1989. "Firm incentives to promote technological change in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 17(3), pages 247-265, November.
  6. Sanstad, Alan H. & Howarth, Richard B., 1994. "`Normal' markets, market imperfections and energy efficiency," Energy Policy, Elsevier, Elsevier, vol. 22(10), pages 811-818, October.
  7. Metcalf, Gilbert E., 1994. "Economics and rational conservation policy," Energy Policy, Elsevier, Elsevier, vol. 22(10), pages 819-825, October.
  8. Helfand, Gloria E, 1991. "Standards versus Standards: The Effects of Different Pollution Restrictions," American Economic Review, American Economic Association, American Economic Association, vol. 81(3), pages 622-34, June.
  9. Besanko, David, 1987. "Performance versus design standards in the regulation of pollution," Journal of Public Economics, Elsevier, Elsevier, vol. 34(1), pages 19-44, October.
  10. 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.
  11. Fudenberg, Drew & Tirole, Jean, 1985. "Preemption and Rent Equilization in the Adoption of New Technology," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 52(3), pages 383-401, July.
  12. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521322249.
  13. Carlo Carraro & Domenico Siniscalco, 1992. "Environmental innovation policy and international competition," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 2(2), pages 183-200, March.
  14. Marin, A., 1978. "The choice of efficient pollution policies: Technology and economics in the control of sulphur dioxide," Journal of Environmental Economics and Management, Elsevier, vol. 5(1), pages 44-62, March.
  15. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, Elsevier, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier.
  16. Orr, Lloyd, 1976. "Incentive for Innovation as the Basis for Effluent Charge Strategy," American Economic Review, American Economic Association, American Economic Association, vol. 66(2), pages 441-47, May.
  17. 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.
  18. DeCanio, Stephen J., 1993. "Barriers within firms to energy-efficient investments," Energy Policy, Elsevier, Elsevier, vol. 21(9), pages 906-914, September.
  19. Magat, Wesley A., 1978. "Pollution control and technological advance: A dynamic model of the firm," Journal of Environmental Economics and Management, Elsevier, vol. 5(1), pages 1-25, March.
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Citations

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Cited by:
  1. Théophile T. Azomahou & Raouf Boucekkine & Phu Nguyen-Vanc, . "Promoting Clean Technologies: The Energy Market Structure Crucially Matters," Working Papers, Business School - Economics, University of Glasgow 2008_13, Business School - Economics, University of Glasgow.
  2. AZOMAHOU, Théophile & BOUCEKKINE, Raouf & NGUYEN-VAN, Phu, 2009. "Promoting clean technologies under imperfect competition," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2009011, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Erik Teodoor Verhoef & Peter Nijkamp, 1998. "Energy policies in spatial systems: A spatial price equilibrium approach with heterogeneous regions and endogenous technologies," ERSA conference papers ersa98p113, European Regional Science Association.
  4. Erik T. Verhoef & Peter Nijkamp, 1998. "Spatial Dimensions of Environmental Policies for Trans-Boundary Externalities - A Spatial Price Equilibrium Approach," Tinbergen Institute Discussion Papers, Tinbergen Institute 98-079/3, Tinbergen Institute.
  5. Productivity Commission, 2001. "The environmental performance of commercial buildings," Others, EconWPA 0107010, EconWPA.

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