Advanced Search
MyIDEAS: Login to save this paper or follow this series

Environmental Innovation, War of Attrition and Investment Grants

Contents:

Author Info

  • Cesare Dosi

    ()
    (Università di Padova)

  • Michele Moretto

    ()
    (Università di Padova)

Abstract

The paper analyses the timing of spontaneous environmental innovation when second-mover advantages, arising from the expectation of declining investment costs, increase the option value of waiting created by investment irreversibility and uncertainty about private payoffs. We then focus on the design of public subsidies aimed at bridging the gap between the spontaneous time of technological change and the socially desirable one. Under network externalities and incomplete information about firms’ switching costs, auctioning investment grants appears to be a cost-effective way of accelerating pollution abatement, in that it allows targeting grants instead of subsidizing the entire industry indiscriminately

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.decon.unipd.it/assets/pdf/wp/20070045.pdf
Our checks indicate that this address may not be valid because: 500 Can't connect to www.decon.unipd.it:80 (10060). If this is indeed the case, please notify (Fabio Maria Manenti)
Download Restriction: no

Bibliographic Info

Paper provided by Dipartimento di Scienze Economiche "Marco Fanno" in its series "Marco Fanno" Working Papers with number 0045.

as in new window
Length: 54 pages
Date of creation: Sep 2007
Date of revision:
Handle: RePEc:pad:wpaper:0045

Contact details of provider:
Postal: via del Santo, 33 - 35122 Padova
Phone: +39 +49 8274210
Fax: +39 +49 827.4211
Web page: http://www.decon.unipd.it/
More information through EDIRC

Related research

Keywords: Environmental innovation; Investment irreversibility; Network externalities; Investment grants; Second-price auction.;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Cesare Dosi & Michèle Moretto, 1998. "Auctioning green investment grants as a means of accelerating environmental innovation," Revue d'Économie Industrielle, Programme National Persée, Programme National Persée, vol. 83(1), pages 99-110.
  2. Jeremy Bulow & Paul Klemperer, 1997. "The Generalized War of Attrition," NBER Working Papers 5872, National Bureau of Economic Research, Inc.
  3. Cesare Dosi & Michele Moretto, 1997. "Pollution Accumulation and Firm Incentives to Accelerate Technological Change Under Uncertain Private Benefits," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 10(3), pages 285-300, October.
  4. Cox, John C. & Ross, Stephen A., 1976. "The valuation of options for alternative stochastic processes," Journal of Financial Economics, Elsevier, Elsevier, vol. 3(1-2), pages 145-166.
  5. Lambrecht, Bart & Perraudin, William, 2003. "Real options and preemption under incomplete information," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 27(4), pages 619-643, February.
  6. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, American Economic Association, vol. 75(3), pages 424-40, June.
  7. Mason, Robin & Weeds, Helen, 2001. "Irreversible Investment with Strategic Interactions," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3013, C.E.P.R. Discussion Papers.
  8. Steven R. Grenadier, 2002. "Option Exercise Games: An Application to the Equilibrium Investment Strategies of Firms," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 15(3), pages 691-721.
  9. Harrison, J. Michael & Kreps, David M., 1979. "Martingales and arbitrage in multiperiod securities markets," Journal of Economic Theory, Elsevier, Elsevier, vol. 20(3), pages 381-408, June.
  10. Joseph Farrell & Garth Saloner, 1984. "Standardization, Compatibility and Innovation," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 345, Massachusetts Institute of Technology (MIT), Department of Economics.
  11. McDonald, Robert & Siegel, Daniel, 1986. "The Value of Waiting to Invest," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 101(4), pages 707-27, November.
  12. Bliss, Christopher & Nalebuff, Barry, 1984. "Dragon-slaying and ballroom dancing: The private supply of a public good," Journal of Public Economics, Elsevier, Elsevier, vol. 25(1-2), pages 1-12, November.
  13. Mauer, David C. & Ott, Steven H., 1995. "Investment under Uncertainty: The Case of Replacement Investment Decisions," Journal of Financial and Quantitative Analysis, Cambridge University Press, Cambridge University Press, vol. 30(04), pages 581-605, December.
  14. Moretto, Michele, 2000. "Irreversible investment with uncertainty and strategic behavior," Economic Modelling, Elsevier, Elsevier, vol. 17(4), pages 589-617, December.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. repec:ebl:ecbull:v:4:y:2007:i:39:p:1-14 is not listed on IDEAS
  2. Michele Moretto & Paolo Panteghini, 2007. "Preemption, Start-Up Decisions and the Firms’ Capital Structure," CESifo Working Paper Series 2006, CESifo Group Munich.
  3. Ben Jebli, Mehdi & Ben Youssef, Slim, 2012. "Timing of adoption of clean technologies, transboundary pollution and international trade," MPRA Paper 42467, University Library of Munich, Germany.
  4. Ben Youssef, Slim, 2010. "Timing of adoption of clean technologies by regulated monopolies," MPRA Paper 42470, University Library of Munich, Germany, revised Sep 2012.
  5. Michele Moretto, 2003. "Competition and Irreversible Investments under Uncertainty," Working Papers, Fondazione Eni Enrico Mattei 2003.32, Fondazione Eni Enrico Mattei.
  6. Du Bois, Rodrigo Salcedo & Macias, Miguel Angel Gutierrez, 2013. "Cooperation makes it happen? Groundwater management in Aguascalientes, Mexico: An experimental approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C., Agricultural and Applied Economics Association 151139, Agricultural and Applied Economics Association.
  7. Massimiliano Mazzanti & Roberto Zoboli, 2006. "Examining the Factors Influencing Environmental Innovations," Working Papers, Fondazione Eni Enrico Mattei 2006.20, Fondazione Eni Enrico Mattei.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pad:wpaper:0045. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fabio Maria Manenti).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.