Using Auctions for Pollution Rights as Indirect Incentives for Investments in Green Technologies

Mehdi Fadaee () and Luca Lambertini ()

Working Papers from Dipartimento Scienze Economiche, Universita' di Bologna

Abstract: Acquired wisdom has it that the allocation of pollution rights to firms hinders their willingness to undertake uncertain R&D projects for environmental-friendly technologies. We revisit this issue in a model where firms strategically choose whether to participate in an auction to attain pollution permits, or instead invest in green R&D, to show that, somewhat counterintuitively, a side effect of the auction is in fact that of fostering environmental R&D in an admissible range of the model parameters.

JEL-codes: L13 Q55 (search for similar items in EconPapers)
Date: 2011-02
New Economics Papers: this item is included in nep-cis, nep-ene, nep-env, nep-ino and nep-res
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Persistent link: https://EconPapers.repec.org/RePEc:bol:bodewp:wp729

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