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Taxes, Permits and Costly Policy Response to Technological Change

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  • Coria, Jessica

    ()
    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Hennlock, Magnus

    ()
    (Department of Economics, School of Business, Economics and Law, Göteborg University)

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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File URL: http://hdl.handle.net/2077/22337
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Bibliographic Info

Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 442.

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Length: 40 pages
Date of creation: 10 May 2010
Date of revision:
Handle: RePEc:hhs:gunwpe:0442

Contact details of provider:
Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/
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Keywords: Environmental Taxes; Tradable Permits; Technology Adoption; Policy Adjustment; Regulatory Costs;

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References

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  1. Stephen Coate & Stephen Morris, . ""Policy Persistence ''," CARESS Working Papres 95-19, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  2. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
  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. 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.
  5. Hahn, Robert W, 1990. " The Political Economy of Environmental Regulation: Towards a Unifying Framework," Public Choice, Springer, vol. 65(1), pages 21-47, April.
  6. Zhao, Jinhua & Kling, Catherine L., 2003. "Policy persistence in environmental regulation," Resource and Energy Economics, Elsevier, vol. 25(3), pages 255-268, August.
  7. R. Damania, 1999. "Political Competition, Rent Seeking and the Choice of Environmental Policy Instruments," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 13(4), pages 415-433, June.
  8. Juan-Pablo Montero, 2002. "Market Structure and Environmental Innovation," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 293-325, November.
  9. 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.
  10. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249, April.
  11. 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.
  12. 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.
  13. Requate, Till & Unold, Wolfram, 2003. "Environmental policy incentives to adopt advanced abatement technology:: Will the true ranking please stand up?," European Economic Review, Elsevier, vol. 47(1), pages 125-146, February.
  14. Requate, Till, 2005. "Dynamic incentives by environmental policy instruments--a survey," Ecological Economics, Elsevier, vol. 54(2-3), pages 175-195, August.
  15. Coria, Jessica, 2008. "Taxes, Permits, and the Diffusions of a New Technology," Discussion Papers dp-08-26-efd, Resources For the Future.
  16. Biglaiser, Gary & Horowitz, John K & Quiggin, John, 1995. "Dynamic Pollution Regulation," Journal of Regulatory Economics, Springer, vol. 8(1), pages 33-44, July.
  17. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521311120, April.
  18. Adam Jaffe & Richard Newell & Robert Stavins, 2002. "Environmental Policy and Technological Change," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 41-70, June.
  19. 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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Cited by:
  1. Antoci, Angelo & Borghesi, Simone & Russu, Paolo, 2012. "Environmental protection mechanisms and technological dynamics," Economic Modelling, Elsevier, vol. 29(3), pages 840-847.
  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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