Technology Adoption under Negative External Effects

Oriol Carbonell-Nicolau

The B.E. Journal of Theoretical Economics, 2024, vol. 24, issue 1, 127-157

Abstract: This paper shows that, in the presence of negative production external effects (e.g., waste, pollution), market-driven technology adoption is socially inefficient. Two distinct market structures are considered within the neoclassical framework: perfect competition and monopoly. In both cases, there is a range of cost structures under which firms prefer the adoption of inferior technologies. A number of policy instruments are considered in terms of their welfare enhancing properties.

Keywords: external effects; technology adoption; planned obsolescence; quotas; Pigouvian taxation (search for similar items in EconPapers)
JEL-codes: D62 Q5 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1515/bejte-2022-0089

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