Adoption of a Cleaner Technology by a Monopoly Under Incomplete Information
AbstractWe consider a model consisting of a monopolistic firm producing a certain good with pollution. This firm can adopt a cleaner technology within a finite time by incurring an investment cost decreasing exponentially with the adoption date. At each period of time, the firm is regulated by an emission tax which induces the socially optimal pollution and production levels, and a lump sum tax on profit. The firm is induced to adopt the cleaner technology at the socially optimal date by an appropriate innovation subsidy. In the incomplete information context, the firm has private information concerning the cost of acquiring the new technology. By an appropriate contract consisting of an adoption date and a R&D subsidy depending on the value of the innovation cost parameter announced by the firm, the regulator can induce the latter to reveal the true value of its private information in compensation of a socially costly intertemporal informational rent. However, the socially optimal adoption date of incomplete information is delayed with respect to the complete information one.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 9879.
Date of creation: Jun 2008
Date of revision: Jul 2008
cleaner technology; adoption date; incomplete information;
Other versions of this item:
- Slim Ben Youssef, 2010. "Adoption of a cleaner technology by a monopoly under incomplete information," Economics Bulletin, AccessEcon, vol. 30(1), pages 734-743.
- H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-14 (All new papers)
- NEP-CTA-2008-08-14 (Contract Theory & Applications)
- NEP-ENV-2008-08-14 (Environmental Economics)
- NEP-MIC-2008-08-14 (Microeconomics)
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