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Are Clean Technology and Environmental Quality Conflicting Policy Goals?

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  • Thierry Brechet
  • Guy Meunier

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

  • Thierry Brechet & Guy Meunier, 2012. "Are Clean Technology and Environmental Quality Conflicting Policy Goals?," CEEES Paper Series CE3S-01/12, European University at St. Petersburg, Department of Economics.
  • Handle: RePEc:eus:ce3swp:0112
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    Cited by:

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    2. Jana Stoever & John P. Weche, 2018. "Environmental Regulation and Sustainable Competitiveness: Evaluating the Role of Firm-Level Green Investments in the Context of the Porter Hypothesis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(2), pages 429-455, June.
    3. Inge M. Bijgaart & Sjak Smulders, 2018. "Does a Recession Call for Less Stringent Environmental Policy? A Partial-Equilibrium Second-Best Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(4), pages 807-834, August.
    4. 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.
    5. Yue Zhu & Ziyuan Sun & Shiyu Zhang & Xiaolin Wang, 2021. "Economic Policy Uncertainty, Environmental Regulation, and Green Innovation—An Empirical Study Based on Chinese High-Tech Enterprises," IJERPH, MDPI, vol. 18(18), pages 1-19, September.
    6. Di Maria, Corrado & Smulders, Sjak, 2017. "A paler shade of green: Environmental policy under induced technical change," European Economic Review, Elsevier, vol. 99(C), pages 151-169.
    7. 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.
    8. 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.
    9. Zeng, Bingxin & Zhu, Lei & Yao, Xing, 2020. "Policy choice for end-of-pipe abatement technology adoption under technological uncertainty," Economic Modelling, Elsevier, vol. 87(C), pages 121-130.
    10. Casini, Paolo & Valentini, Edilio, 2019. "Emissions Markets with Price Stabilizing Mechanisms: Possible Unpleasant Outcomes," ES: Economics for Sustainability 291801, Fondazione Eni Enrico Mattei (FEEM) > ES: Economics for Sustainability.
    11. Li, Shoude & Fu, Tong, 2022. "Abatement technology innovation, worker productivity and firm profitability: A dynamic analysis," Energy Economics, Elsevier, vol. 115(C).
    12. Bouwe R. Dijkstra & Maria J. Gil‐Moltó, 2018. "Is emission intensity or output U‐shaped in the strictness of environmental policy?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(2), pages 177-201, April.
    13. 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.
    14. Alfred Endres & Tim Friehe & Bianca Rundshagen, 2020. "Diffusion and adoption of advanced emission abatement technology induced by permit trading," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1313-1337, September.
    15. 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.
    16. 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.
    17. Haiyang Xia & Tijun Fan & Xiangyun Chang, 2019. "Emission Reduction Technology Licensing and Diffusion Under Command-and-Control Regulation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(2), pages 477-500, February.
    18. 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.
    19. Idrissa Sibailly, 2013. "On licensing and diffusion of clean technologies in oligopoly," Working Papers hal-00911453, HAL.

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    More about this item

    Keywords

    innovation; technology adoption; environmental regulation;
    All these keywords.

    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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