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Clean technology adoption and its influence on tradeable emission permit prices

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  • SANIN, Maria Eugenia
  • ZANAJ, Skerdilajda

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

Abstract

In this paper we give an example in which the price of tradeable emission permits increases despite firms' adoption of a less polluting technology. This is in contrast with Montero (2002) and Parry (1998), among others. If two Counot players switch to a cleaner technology, the price for permits may increase due to an increase in the net demand for permits and a decrease in net supply of permits after the clean technology is adopted. This is only the case when output demand is elastic.

Suggested Citation

  • SANIN, Maria Eugenia & ZANAJ, Skerdilajda, 2009. "Clean technology adoption and its influence on tradeable emission permit prices," LIDAM Discussion Papers CORE 2009029, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2009029
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    Cited by:

    1. Creti, Anna & Sanin, María-Eugenia, 2017. "Does environmental regulation create merger incentives?," Energy Policy, Elsevier, vol. 105(C), pages 618-630.
    2. Bertrand Crettez & Pierre-André Jouvet & Ludovic A. Julien, 2014. "Tax Policy in a Simple General Oligopoly Equilibrium Model with Pollution Permits," Working Papers 1413, Chaire Economie du climat.
    3. Anicet Kabre, 2018. "Cobb-Douglas preferences and pollution in a bilateral oligopoly market," EconomiX Working Papers 2018-48, University of Paris Nanterre, EconomiX.
    4. Anicet Kabre, 2018. "Cobb-Douglas preferences and pollution in a bilateral oligopoly market," Working Papers hal-04141683, HAL.
    5. Ceccantoni, Giulia & Tarola, Ornella & Zanaj, Skerdilajda, 2018. "Green Consumption and Relative Preferences in a Vertically Differentiated International Oligopoly," Ecological Economics, Elsevier, vol. 149(C), pages 129-139.
    6. Alfred Endres & Tim Friehe, 2013. "The monopolistic polluter under environmental liability law: incentives for abatement and R&D," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 40(3), pages 753-770, March.
    7. Maccarrone, Giovanni & Marini, Marco A. & Tarola, Ornella, "undated". "Shop Until You Drop: the Unexpected Effects of Anticonsumerism and Environmentalism," FEEM Working Papers 330384, Fondazione Eni Enrico Mattei (FEEM).
    8. Bingxin Zeng & Lei Zhu, 2019. "Market Power and Technology Diffusion in an Energy-Intensive Sector Covered by an Emissions Trading Scheme," Sustainability, MDPI, vol. 11(14), pages 1-18, July.
    9. Maria Eugenia Sanin, 2018. "Counterpart Choice in Emission Markets: Beyond Pollution Abatement Motives," The Energy Journal, , vol. 39(2_suppl), pages 139-164, December.
    10. Julien Jacob & Sandrine Spaeter, 2016. "Large-Scale Risks and Technological Change: What About Limited Liability?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 18(1), pages 125-142, February.
    11. Alfred Endres & Tim Friehe, 2012. "Generalized Progress of Abatement Technology: Incentives Under Environmental Liability Law," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 53(1), pages 61-71, September.
    12. Bréchet, Thierry & Meunier, Guy, 2014. "Are clean technology and environmental quality conflicting policy goals?," Resource and Energy Economics, Elsevier, vol. 38(C), pages 61-83.
    13. Tiho Ancev & Rimvydas Baltaduonis & Elizabeth Immer‐Bernold, 2021. "Regulating greenhouse gas emissions by an inter‐temporal policy mix: an experimental investigation," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(3), pages 512-538, July.
    14. Maria Eugenia Sanin, 2016. "Tradable emission permits: beyond pollution abatement motives," Documents de recherche 16-01, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.

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    Keywords

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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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