Abatement R&D, market imperfections, and environmental policy in an endogenous growth model

Hsun Chu and Ching-chong Lai

Journal of Economic Dynamics and Control, 2014, vol. 41, issue C, 20-37

Abstract: We develop an endogenous growth model featuring environmental externalities, abatement R&D, and market imperfections. We compare the economic performances under three distinct regimes that encompass public abatement, private abatement without tax recycling, and private abatement with tax recycling. It is found that the benefit arising from private abatement will be larger if the degree of the firms’ monopoly power is greater. With a reasonably high degree of monopoly power, a mixed abatement policy by which the government recycles environmental tax revenues to subsidize the private abatement R&D is a plausible way of reaching the highest growth rate and welfare.

Keywords: Private abatement R&D; Market imperfections; Endogenous growth (search for similar items in EconPapers)
JEL-codes: H23 O32 Q56 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (20)

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Working Paper: Abatement R&D, Market Imperfections, and Environmental Policy in an Endogenous Growth Model (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:41:y:2014:i:c:p:20-37

DOI: 10.1016/j.jedc.2014.02.011

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