On the Incentives Created by Policy Instruments to Adopt Advanced Abatement Technology if Firms are Asymmetric
Till Requate () and
Journal of Institutional and Theoretical Economics (JITE), 2001, vol. 157, issue 4, 536-554
The paper investigates the incentives created by environmental policy instruments to adopt cleaner technology. In a framework with many asymmetric firms we show that, if the regulator has committed to a certain aggregate emission level before the new technology was available, taxes lead to overinvestment, while both auctioned and free permits lead to underinvestment. If, however, the regulator knows the new technology, he is able to induce the socially optimal degree of adoption independently of whether he moves before or after adoption.
JEL-codes: L5 Q2 Q28 (search for similar items in EconPapers)
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