Timing and Commitment of Environmental Policy, Adoption of New Technology, and Repercussions on R&D

Till Requate ()

Environmental & Resource Economics, 2005, vol. 31, issue 2, 175-199

Abstract: We investigate the interplay between environmental policy, incentives to adoptnew technology, and repercussions on R&D. We study a model where a monopolistic upstream firm engages in R&D and sells advanced abatement technology to polluting downstream firms. We consider four different timing and commitment regimes of environmental tax and permit policies: ex post taxation (or issuing permits), interim commitment to a tax rate (a quota of permits) after observing R&D success but before adoption, and finally two types of ex antecommitment before R&D activity, one with a unique tax rate (quota of permits), the other one with a menu of tax rates (permit quotas). We study the second best tax and permit policies and rank these with respect to welfare. In particular, we find that commitment to a menu of tax rate dominates all other policy regimes. Copyright Springer 2005

Keywords: commitment; emission taxes; environmental policy; R&D; technology adoption; time consistency; tradeable permits; L5; Q2; Q28 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (104)

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DOI: 10.1007/s10640-005-1770-x

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