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Abatement R&D, market imperfections, and environmental policy in an endogenous growth model

Listed author(s):
  • Chu, Hsun
  • Lai, Ching-chong

We develop an endogenous growth model featuring environmental externalities, abatement R&D, and market imperfections. We compare the economic performances under three distinct regimes that encompass public abatement, private abatement without tax recycling, and private abatement with tax recycling. It is found that the benefit arising from private abatement will be larger if the degree of the firms’ monopoly power is greater. With a reasonably high degree of monopoly power, a mixed abatement policy by which the government recycles environmental tax revenues to subsidize the private abatement R&D is a plausible way of reaching the highest growth rate and welfare.

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File URL: http://www.sciencedirect.com/science/article/pii/S0165188914000566
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Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 41 (2014)
Issue (Month): C ()
Pages: 20-37

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Handle: RePEc:eee:dyncon:v:41:y:2014:i:c:p:20-37
DOI: 10.1016/j.jedc.2014.02.011
Contact details of provider: Web page: http://www.elsevier.com/locate/jedc

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