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Are clean technology and environmental quality conflicting policy goals?

Author

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  • BRECHET, Thierry

    () (Université catholique de Louvain, CORE and Louvain School of Economics, B-1348 Louvain-la-Neuve, Belgium)

  • MEUNIER, Guy

    () (INRA-UR, ALISS & Ecole Polytecnique, France)

Abstract

In this paper we analyze the effects of an environmental policy on the diffusion of a clean technology in an economy where firms compete on the output market. We show that the share of adopting firms is non-monotonic with the stringency of the environmental policy, and that the adoption of the clean technology may well increase the pollution level. We also compare the effects of an emission tax and tradable pollution permits on welfare, technology adoption, and pollution level. We show that, depending on the stringency of the policy, either the tax or the permits can yield a higher degree of technology adoption and pollution. Actually, technology adoption and environmental quality may be conflicting in discriminating among the instruments.

Suggested Citation

  • BRECHET, Thierry & MEUNIER, Guy, 2012. "Are clean technology and environmental quality conflicting policy goals?," CORE Discussion Papers 2012006, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2012006
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    File URL: http://uclouvain.be/cps/ucl/doc/core/documents/coredp2012_6web.pdf
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    References listed on IDEAS

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    1. Martin L. Weitzman, 1974. "Prices vs. Quantities," Review of Economic Studies, Oxford University Press, vol. 41(4), pages 477-491.
    2. Weber, Thomas A. & Neuhoff, Karsten, 2010. "Carbon markets and technological innovation," Journal of Environmental Economics and Management, Elsevier, vol. 60(2), pages 115-132, September.
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    6. 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.
    7. Baker, Erin & Adu-Bonnah, Kwame, 2008. "Investment in risky R&D programs in the face of climate uncertainty," Energy Economics, Elsevier, vol. 30(2), pages 465-486, March.
    8. Sanin, Maria-Eugenia & Zanaj, Skerdilajda, 2012. "Clean Technology Adoption Under Cournot Competition," Strategic Behavior and the Environment, now publishers, vol. 2(2), pages 159-172, July.
    9. 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.
    10. Yoram Bauman & Myunghun Lee & Karl Seeley, 2008. "Does Technological Innovation Really Reduce Marginal Abatement Costs? Some Theory, Algebraic Evidence, and Policy Implications," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(4), pages 507-527, August.
    11. Bréchet, Thierry & Jouvet, Pierre-André, 2008. "Environmental innovation and the cost of pollution abatement revisited," Ecological Economics, Elsevier, vol. 65(2), pages 262-265, April.
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    14. 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.
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    Citations

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    Cited by:

    1. Mare Sarr & Joëlle Noailly, 2017. "Innovation, Diffusion, Growth and the Environment: Taking Stock and Charting New Directions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 66(3), pages 393-407, March.
    2. Lambertini, Luca & Poyago-Theotoky, Joanna & Tampieri, Alessandro, 2017. "Cournot competition and “green” innovation: An inverted-U relationship," Energy Economics, Elsevier, vol. 68(C), pages 116-123.
    3. Thierry Bréchet & Sylvette Ly, 2013. "The many traps of green technology promotion," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(1), pages 73-91, January.
    4. Bouwe Dijkstra & Maria J. Gil-Moltó, 2014. "Is Emission Intensity or Output U-shaped in the Strictness of Environmental Policy," CESifo Working Paper Series 4833, CESifo Group Munich.
    5. 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.
    6. van den Bijgaart, Inge, 2016. "Essays in environmental economics and policy," Other publications TiSEM 298bee2a-cb08-4173-9fe1-8, Tilburg University, School of Economics and Management.
    7. Idrissa Sibailly, 2013. "On licensing and diffusion of clean technologies in oligopoly," Working Papers hal-00911453, HAL.
    8. repec:kap:enreec:v:70:y:2018:i:2:d:10.1007_s10640-017-0128-5 is not listed on IDEAS
    9. Gil-Moltó, Maria José & Varvarigos, Dimitrios, 2013. "Emission taxes and the adoption of cleaner technologies: The case of environmentally conscious consumers," Resource and Energy Economics, Elsevier, vol. 35(4), pages 486-504.
    10. repec:eee:eecrev:v:99:y:2017:i:c:p:151-169 is not listed on IDEAS
    11. Lan, Jing & Munro, Alistair & Liu, Zhen, 2017. "Environmental regulatory stringency and the market for abatement goods and services in China," Resource and Energy Economics, Elsevier, vol. 50(C), pages 105-123.
    12. Wenjun Sun & Naoto Jinji, 2014. "The Effects of Emission Taxes on Pollution through the Diffusion of Clean Technology:The Presence of Green Consumers," Discussion papers e-14-014, Graduate School of Economics Project Center, Kyoto University.

    More about this item

    Keywords

    innovation; technology adoption; environmental regulation;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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