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Climate change mitigation policies: Are R&D subsidies preferable to a carbon tax?

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  • GRIMAUD André
  • LAFFORGUE Gilles

Abstract

We consider a general equilibrium climate change model with two endogenous R&Dsectors. First, we characterize the set of decentralized equilibria : to each vector of publictools – a carbon tax and a subsidy to each R&D sector – is associated a particularequilibrium. Second, we compute the optimal tools. Third, we perform various second-best analysis by imposing some constraints on one or several policy. The main resultsof the paper are the following : i) both a carbon tax and a green research subsidycontribute to the climate change mitigation ; ii) R&D subsidies have a large impact onthe consumption, and then on the social welfare, as compared with the carbon tax usedalone ; iii) those subsidies allow to spare the earlier generations who are, on the otherhand, penalized by a carbon tax.
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  • GRIMAUD André & LAFFORGUE Gilles, 2008. "Climate change mitigation policies: Are R&D subsidies preferable to a carbon tax?," LERNA Working Papers 08.31.275, LERNA, University of Toulouse.
  • Handle: RePEc:ler:wpaper:08.31.275
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    4. Reyer Gerlagh & Snorre Kverndokk & Knut Einar Rosendah, 2008. "Linking Environmental and Innovation Policy," Working Papers 2008.53, Fondazione Eni Enrico Mattei.
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    Cited by:

    1. Adrien Vogt-Schilb & Guy Meunier & Hallegatte Stéphane, 2013. "Should marginal abatement costs differ across sectors? The effect of low-carbon capital accumulation," Post-Print hal-00829420, HAL.
    2. Samuel Fankhauser & Cameron Hepburn & Jisung Park, 2010. "Combining Multiple Climate Policy Instruments: How Not To Do It," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 1(03), pages 209-225.
    3. Grimaud, André & Lafforgue, Gilles & Magné, Bertrand, 2011. "Climate change mitigation options and directed technical change: A decentralized equilibrium analysis," Resource and Energy Economics, Elsevier, vol. 33(4), pages 938-962.

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