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Taxes, Permits and Costly Policy Response to Technological Change

  • Coria, Jessica

    ()

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Hennlock, Magnus

    ()

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

In this paper we analyze the e ects of the choice of price (taxes) versus quantity (tradable permits) instruments on the policy response to technological change. We show that if policy responses incur transactional and political adjustment costs, environmental targets are less likely to be adjusted under tradable per- mits than under emission taxes. This implies that the total level of abatement over time might remain unchanged under tradable permits while it will increase under emission taxes.

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File URL: http://hdl.handle.net/2077/22337
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Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 442.

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Length: 40 pages
Date of creation: 10 May 2010
Date of revision:
Handle: RePEc:hhs:gunwpe:0442
Contact details of provider: Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
Web page: http://www.handels.gu.se/econ/

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  1. R. Damania, 1999. "Political Competition, Rent Seeking and the Choice of Environmental Policy Instruments," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 13(4), pages 415-433, June.
  2. Till Requate & Wolfram Uunold, 2001. "On the Incentives Created by Policy Instruments to Adopt Advanced Abatement Technology if Firms are Asymmetric," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 157(4), pages 536-, December.
  3. Gersbach, Hans & Glazer, Amihai, 1998. "Markets and regulatory hold-up problems," University of California Transportation Center, Working Papers qt9gf9t35g, University of California Transportation Center.
  4. Biglaiser, Gary & Horowitz, John K & Quiggin, John, 1995. "Dynamic Pollution Regulation," Journal of Regulatory Economics, Springer, vol. 8(1), pages 33-44, July.
  5. Hahn, Robert W, 1990. " The Political Economy of Environmental Regulation: Towards a Unifying Framework," Public Choice, Springer, vol. 65(1), pages 21-47, April.
  6. repec:cup:cbooks:9780521311120 is not listed on IDEAS
  7. Adam Jaffe & Richard Newell & Robert Stavins, 2002. "Environmental Policy and Technological Change," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 41-70, June.
  8. Stephen Coate & Stephen Morris, . ""Policy Persistence ''," CARESS Working Papres 95-19, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  9. Jung, Chulho & Krutilla, Kerry & Boyd, Roy, 1996. "Incentives for Advanced Pollution Abatement Technology at the Industry Level: An Evaluation of Policy Alternatives," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 95-111, January.
  10. Coria, Jessica, 2011. "Environmental crises' regulations, tradable permits and the adoption of new technologies," Resource and Energy Economics, Elsevier, vol. 33(3), pages 455-476, September.
  11. Coria, Jessica, 2008. "Taxes, Permits, and the Diffusions of a New Technology," Discussion Papers dp-08-26-efd, Resources For the Future.
  12. Jinhua Zhao & Catherine L. Kling, 2000. "Policy Persistence in Environmental Regulation," Center for Agricultural and Rural Development (CARD) Publications 00-wp257, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  13. Requate, Till, 2005. "Dynamic incentives by environmental policy instruments--a survey," Ecological Economics, Elsevier, vol. 54(2-3), pages 175-195, August.
  14. Juan-Pablo Montero, 2002. "Market Structure and Environmental Innovation," Documentos de Trabajo 215, Instituto de Economia. Pontificia Universidad Católica de Chile..
  15. Downing, Paul B. & White, Lawrence J., 1986. "Innovation in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 13(1), pages 18-29, March.
  16. repec:cup:cbooks:9780521322249 is not listed on IDEAS
  17. Milliman, Scott R. & Prince, Raymond, 1989. "Firm incentives to promote technological change in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 17(3), pages 247-265, November.
  18. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, June.
  19. 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.
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