End of the line: A Note on Environmental Policy and Innovation when Governments cannot Commit
AbstractIt is widely accepted that one of the most important characteristics of an effective climate policy is to provide firms with credible incentives to make long-run investments in R&D that can drastically reduce emissions. Recognizing that a government may be tempted to revise its policy design after innovations become available, this note shows how the performance of two policy instruments Â–prices (uniform taxes) and quantities (tradeable pollution permits)Â– differ in such a setting.I also discuss the gains from combining either instrument with subsidies to adopting firms.
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Bibliographic InfoPaper provided by Instituto de Economia. Pontificia Universidad Católica de Chile. in its series Documentos de Trabajo with number 394.
Date of creation: 2011
Date of revision:
Pollution control; innovation; commitment;
Find related papers by JEL classification:
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-09 (All new papers)
- NEP-ENE-2011-04-09 (Energy Economics)
- NEP-ENV-2011-04-09 (Environmental Economics)
- NEP-INO-2011-04-09 (Innovation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Carrión-Flores, Carmen E. & Innes, Robert, 2010. "Environmental innovation and environmental performance," Journal of Environmental Economics and Management, Elsevier, vol. 59(1), pages 27-42, January.
- Rob Aalbers & Victoria Shestalova & Viktoria Kocsis, 2012. "Innovation policy for directing technical change in the power sector," CPB Discussion Paper 223, CPB Netherlands Bureau for Economic Policy Analysis.
- David Tobón Orozco & Carlos Andrés Vasco Correa, 2011. "Un modelo de equilibrio general con externalidades y capital natural," Libros del Grupo Microeconomía Aplicada, Universidad de Antioquia, Departamento de Economía, edition 1, number 01.
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