Policy analysis for emission-reduction with green technology investment in manufacturing

Junsong Bian and Xiaolong Guo ()
Additional contact information
Junsong Bian: La Trobe University
Xiaolong Guo: University of Science and Technology of China

Annals of Operations Research, 2022, vol. 316, issue 1, No 2, 5-32

Abstract: Abstract Different environmental policies create different incentives for emission reduction. The paper examines the effect of two environmental policies, the emission abatement subsidy and emission tax policies, on a market with manufacturer investment in a green technology to reduce emission. Compared to environmental taxation, the results show that the subsidy policy offers a greater incentive to abate emission and yields higher industry profit. However, regarding social welfare, the subsidy policy leads to lower social welfare and environmental performance than the tax policy when emission is highly damaging to the environment and emission abatement is sufficiently costly. From the industrial perspective, increasing technological efficiency is not necessarily beneficial even if it is costless as the government will adjust the environmental policy accordingly for social welfare optimization, may at the manufacturer’s expense. Finally, extensions considering a combined policy (both subsidy and tax), a multiplicative emission cost function, and the problem in a supply chain context are performed to check the robustness of the results.

Keywords: Sustainable operations; Environmental subsidy and tax; Emission control; Green technology investment; Game theory (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s10479-021-04071-7 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:annopr:v:316:y:2022:i:1:d:10.1007_s10479-021-04071-7

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10479

DOI: 10.1007/s10479-021-04071-7

Access Statistics for this article

Annals of Operations Research is currently edited by Endre Boros

More articles in Annals of Operations Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().