Is Emission Intensity or Output U-shaped in the Strictness of Environmental Policy

Bouwe Dijkstra and Maria J. Gil-Moltó
Authors registered in the RePEc Author Service: Maria Jose Gil Molto

No 4833, CESifo Working Paper Series from CESifo

Abstract: In a model where firms face a continuous choice of how much to invest in environmental innovation, we show that an ever stricter environmental policy does not always lead to ever cleaner production methods and ever lower production of polluting goods. It does so when the abatement technology is end-of-pipe. When the abatement technology is integrated however, either emission intensity or output is U-shaped in the strictness of policy. If the emission intensity is U-shaped, it will reach its lowest value at the point where the Marginal Abatement Cost curves intersect. These results hold with emission taxation (whether firms are price-takers or they interact strategically on the output market) as well as in the social optimum.

Keywords: environmental innovation; environmental taxation; oligopoly; marginal abatement costs (search for similar items in EconPapers)
JEL-codes: L13 Q55 Q58 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Is emission intensity or output U‐shaped in the strictness of environmental policy? (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_4833

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