Tariffs and the Adoption of Clean Technology Under Asymmetric Information
AbstractThis paper examines the effect of import tariffs on the decision of a foreign monopolist to adopt “clean” technology – technology that reduces the flow of a negative cross-border externality per unit of exports. The clean technology is assumed to increase the marginal cost of production relative to the dirty technology, but only the firm knows the extent of the increase. Under complete information, we show that, despite its protectionist motivation, the importing country’s optimal tariff induces the firm to adopt the clean technology if and only if it is globally efficient to do so. Under incomplete information, this efficiency property is disrupted. If the optimal tariff is decreasing in the marginal cost, then it leads the firm to bias its choice in favor of dirty technology. Classification-JEL Codes: F13, F18
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Date of creation: 09 Jun 2006
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Other versions of this item:
- Rodney D. Ludema & Taizo Takeno, 2007. "Tariffs and the adoption of clean technology under asymmetric information," Canadian Journal of Economics, Canadian Economics Association, vol. 40(4), pages 1100-1117, November.
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F18 - International Economics - - Trade - - - Trade and Environment
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-04 (All new papers)
- NEP-INO-2006-11-04 (Innovation)
- NEP-IPR-2006-11-04 (Intellectual Property Rights)
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