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Adoption of a cleaner technology by a monopoly under incomplete information

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  • Slim Ben Youssef

    () (Ecole Supérieure de Commerce de Tunis)

Abstract

We consider a monopolistic firm producing a good while polluting. This firm can adopt a cleaner technology within a finite time by incurring an investment cost decreasing exponentially with the adoption date. 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 new technology. Interestingly, the regulator can induce the firm to reveal the true value of its private information by a contract consisting of an adoption date which is increasing with the value of the innovation cost parameter announced by the firm, and a R&D subsidy which is decreasing with the value of the innovation cost parameter announced by the firm. Nevertheless, the socially optimal adoption date of incomplete information is delayed with respect to the complete information one.

Suggested Citation

  • Slim Ben Youssef, 2010. "Adoption of a cleaner technology by a monopoly under incomplete information," Economics Bulletin, AccessEcon, vol. 30(1), pages 734-743.
    • Handle: RePEc:ebl:ecbull:eb-10-00036
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    References listed on IDEAS

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    1. Farzin, Y H & Kort, P M, 2000. " Pollution Abatement Investment When Environmental Regulation Is Uncertain," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(2), pages 183-212.
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    8. 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.
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    Cited by:

    1. Slim Ben Youssef, 2015. "Timing of Adoption of Clean Technologies by Regulated Monopolies," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(1), pages 77-92, March.
    2. Ben Youssef, Slim, 2010. "Adoption of a clean technology using a renewable energy," MPRA Paper 25576, University Library of Munich, Germany.

    More about this item

    Keywords

    cleaner technology; adoption date; R&D subsidy; incomplete information.;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D6 - Microeconomics - - Welfare Economics

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