Timing of Environmental Regulation and the Adoption of Low-Pollution Technologies: An Experiment

Lidia Vidal-Melia, Eva Camacho-Cuena, Till Requate and Israel Waichman

No 12539, CESifo Working Paper Series from CESifo

Abstract: We experimentally investigate how the timing of, and commitment to, an environmental regulation affects efficient technology adoption under emission taxes and tradable permits. An environmental regulator can either commit ex-ante to a specific policy level or ex-post to a rule on how to adjust the policy level after firms have decided whether or not to adopt an advanced low-emission technology. In a 2x2 design, we examine the performance of the four environmental policies (ex-ante vs. ex-post; tax vs. permits), all of which should theoretically lead to the social optimum. Indeed, we find that, in all scenarios, firms' adoption of advanced technology is close to the social optimum. Regarding static efficiency, the tax policy slightly outperforms the permit policy. However, the overall efficiency is very high in all treatments, suggesting that ex-post regulations do not necessarily hinder the adoption of low-polluting technologies.

Keywords: technology adoption; emissions trading; regulator commitment timing; market design experiment (search for similar items in EconPapers)
JEL-codes: C92 D44 L51 Q28 Q55 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-ene, nep-env and nep-exp
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Journal Article: Timing of Environmental Regulation and the Adoption of Low-Pollution Technologies: An Experiment (2026)
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