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Clean technology adoption and its influence on tradeable emission permit prices

Author

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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," CORE Discussion Papers 2009029, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2009029
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    File URL: http://www.uclouvain.be/cps/ucl/doc/core/documents/coredp2009_29.pdf
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    Citations

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    Cited by:

    1. 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.
    2. Anna CRETI & María-Eugenia SANIN, 2016. "Does environmental regulation create merger incentives?," Documents de recherche 16-07, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    3. 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.
    4. 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.

    More about this item

    Keywords

    environmental innovation; tradable emission permits; Cournot interaction;

    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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