EconPapers    
Economics at your fingertips  
 

Adopt or Innovate: Understanding Technological Responses to Cap-and-Trade

Raphael Calel

No 6847, CESifo Working Paper Series from CESifo Group Munich

Abstract: Environmental regulations have consistently been found to spur innovation in ‘clean’ technologies, with one significant exception. Past cap-and-trade programs have encouraged adoption of existing pollution control technologies, but had little effect on innovation. Several explanations have been offered, including secondary market failures and a lack of polluter sophistication. In this paper I argue that it likely has more to do with the state of the technologies. Using a newly constructed panel of British companies, I show that the European carbon market - the world’s largest cap-and-trade program - has, contrary to past experience, encouraged innovation rather than adoption. I discuss how these contrasting findings can be reconciled, and the implications for planned reforms.

Keywords: EU emissions trading system; induced innovation; directed technological change; technology diffusion (search for similar items in EconPapers)
JEL-codes: O30 Q55 Q58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env, nep-ino and nep-reg
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
https://www.cesifo-group.de/DocDL/cesifo1_wp6847.pdf (application/pdf)

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:ces:ceswps:_6847

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Group Munich Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().

 
Page updated 2019-10-14
Handle: RePEc:ces:ceswps:_6847