Environmental tax reform and induced technological change

Hiroaki Yamagami

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the importance of induced technological change in considering the efficiency costs of environmental policy. In particular, in modeling an endogenous formation of energy-saving technology through a variety of intermediates, the paper studies the welfare effects of environmental tax reform in a general equilibrium model. Using this model, the paper shows that environmental tax reform induces an expansion of the variety of intermediates by increasing rents from innovating new intermediates and, thereby, brings technological change. Then, the induced variety expansion by environmental tax reform achieves positive externalities and plays an important role both to decrease the efficiency costs and to improve the environmental quality.

Keywords: Double dividend; Energy saving; Environmental tax reform; Induced technological change; Tax-interaction effect (search for similar items in EconPapers)
JEL-codes: D62 H23 Q55 Q58 (search for similar items in EconPapers)
Date: 2013-04
New Economics Papers: this item is included in nep-acc, nep-ene, nep-env, nep-pbe and nep-res
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https://mpra.ub.uni-muenchen.de/47178/9/MPRA_paper_47178.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:46516

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