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Environmental innovation and the cost of pollution abatement

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  • BRECHET, Thierry
  • JOUVET, Pierre-André

Abstract

The impact of environmental innovation on the marginal pollution abatement cost at the firm level is investigated. We show that the common assumption that innovation reduces the marginal abatement cost is wrong. We draw some implications about the incentives to innovate under environmental regulation. In particular, we find that adopting an environmental friendly tech- nology may lead to more pollution and less profit at the firm level.

Suggested Citation

  • BRECHET, Thierry & JOUVET, Pierre-André, 2006. "Environmental innovation and the cost of pollution abatement," LIDAM Discussion Papers CORE 2006040, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2006040
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    References listed on IDEAS

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    1. Martin L. Weitzman, 1974. "Prices vs. Quantities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(4), pages 477-491.
    2. Montero, Juan-Pablo, 2002. "Permits, Standards, and Technology Innovation," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 23-44, July.
    3. Fischer, Carolyn & Parry, Ian W. H. & Pizer, William A., 2003. "Instrument choice for environmental protection when technological innovation is endogenous," Journal of Environmental Economics and Management, Elsevier, vol. 45(3), pages 523-545, May.
    4. McKitrick, Ross, 1999. "A Derivation of the Marginal Abatement Cost Curve," Journal of Environmental Economics and Management, Elsevier, vol. 37(3), pages 306-314, May.
    5. Karen Palmer & Wallace E. Oates & Paul R. Portney & Karen Palmer & Wallace E. Oates & Paul R. Portney, 2004. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 3, pages 53-66, Edward Elgar Publishing.
    6. Requate, Till & Unold, Wolfram, 2003. "Environmental policy incentives to adopt advanced abatement technology:: Will the true ranking please stand up?," European Economic Review, Elsevier, vol. 47(1), pages 125-146, February.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Heal, Geoffrey & Tarui, Nori, 2008. "Technology Diffusion, Abatement Cost, and Transboundary Pollution," Climate Change Modelling and Policy Working Papers 46653, Fondazione Eni Enrico Mattei (FEEM).
    2. Perino, Grischa & Requate, Till, 2012. "Does more stringent environmental regulation induce or reduce technology adoption? When the rate of technology adoption is inverted U-shaped," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 456-467.
    3. Virginia CIOBOTARU & Oana Catalina TAPURICA, 2011. "ANALYZING THE CONNEXIONS BETWEEN ECONOMIC DEVELOPMENT AND ENVIRONMENTAL COMPLIANCe: AN INTEGRATED APPROACH," Management Research and Practice, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 3(4), pages 15-22, December.
    4. María-Eugenia Sanin & Skerdilajda Zanaj, 2011. "A Note on Clean Technology Adoption and its Influence on Tradeable Emission Permits Prices," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(4), pages 561-567, April.
    5. SANIN, Maria Eugenia & ZANAJ, Skerdilajda, 2007. "Environmental innovation under Cournot competition," LIDAM Discussion Papers CORE 2007050, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. BRECHET, Thierry & LY, Sylvette, 2010. "Technological greening, eco-efficiency, and no-regret strategy," LIDAM Discussion Papers CORE 2010031, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Heal, Geoffrey & Tarui, Nori, 2010. "Investment and emission control under technology and pollution externalities," Resource and Energy Economics, Elsevier, vol. 32(1), pages 1-14, January.

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    More about this item

    Keywords

    innovation; pollution abatement cost; production function; environmen- tal regulation.;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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