Adoption of a Cleaner Technology by a Monopoly Under Incomplete Information
We consider a model consisting of a monopolistic firm producing a certain good with pollution. This firm can adopt a cleaner technology within a finite time by incurring an investment cost decreasing exponentially with the adoption date. At each period of time, the firm is regulated by an emission tax which induces the socially optimal pollution and production levels, and a lump sum tax on profit. The firm is induced to adopt the cleaner technology at the socially optimal date by an appropriate innovation subsidy. In the incomplete information context, the firm has private information concerning the cost of acquiring the new technology. By an appropriate contract consisting of an adoption date and a R&D subsidy depending on the value of the innovation cost parameter announced by the firm, the regulator can induce the latter to reveal the true value of its private information in compensation of a socially costly intertemporal informational rent. However, the socially optimal adoption date of incomplete information is delayed with respect to the complete information one.
|Date of creation:||Jun 2008|
|Date of revision:||Jul 2008|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Farzin, Y H & Kort, P M, 2000.
" Pollution Abatement Investment When Environmental Regulation Is Uncertain,"
Journal of Public Economic Theory,
Association for Public Economic Theory, vol. 2(2), pages 183-212.
- Kort, P.M. & Farzin, Y.H., 2000. "Pollution abatement investment when environmental regulation is uncertain," Other publications TiSEM 90e78d8b-95d9-4d17-9d0f-4, Tilburg University, School of Economics and Management.
- Ballard, Charles L & Shoven, John B & Whalley, John, 1985. "General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States," American Economic Review, American Economic Association, vol. 75(1), pages 128-38, March.
- Jean Tirole & Jean-Jaques Laffont, 1985.
"Using Cost Observation to Regulate Firms,"
368, Massachusetts Institute of Technology (MIT), Department of Economics.
- Kwerel, Evan, 1977. "To Tell the Truth: Imperfect Information and Optimal Pollution Control," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 595-601, October.
- 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.
- Laffont, Jean-Jacques, 1992.
"The New Economics of Regulation Ten Years After,"
IDEI Working Papers
22, Institut d'Économie Industrielle (IDEI), Toulouse.
- 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.
- Cesare Dosi & Michele Moretto, 1997. "Pollution Accumulation and Firm Incentives to Accelerate Technological Change Under Uncertain Private Benefits," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 10(3), pages 285-300, October.
- Rodney Ludema & Taizo Takeno, 2006.
"Tariffs and the Adoption of Clean Technology Under Asymmetric Information,"
gueconwpa~06-06-09, Georgetown University, Department of Economics.
- Rodney D. Ludema & Taizo Takeno, 2007. "Tariffs and the adoption of clean technology under asymmetric information," Canadian Journal of Economics, Canadian Economics Association, vol. 40(4), pages 1100-1117, November.
- Stranlund, John K., 1997. "Public Technological Aid to Support Compliance to Environmental Standards," Journal of Environmental Economics and Management, Elsevier, vol. 34(3), pages 228-239, November.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:9879. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.