Innovation Under the Threat of Stricter Environmental Standards

Olivier Cadot and Bernard Sinclair-Desgagné ()

CIRANO Working Papers from CIRANO

Abstract: This paper considers the threat of stricter regulation as a policy instrument to enhance innovation into cleaner technology. It is argued that in some contexts the government would find it optimal to regulate with positive probability but not with certainty. In those contexts the optimal policy is indeed made of regulatory threats; furthermore, we show that it is time-consistent, credible, involving little information, and immune to ex post renegotiation. Ce document considère la menace d'une réglementation environnementale plus stricte en tant qu'instrument de politique économique visant à stimuler l'innovation. Il est démontré que, dans certains cas, le gouvernement préférerait réglementer avec une probabilité positive pas avec certitude. Dans ces situations, la politique optimale est en effet constituée de menaces de réglementation ; il est de plus démontré qu'elle est cohérente dans le temps, crédible, peu exigeante en information et robuste à la renégociation.

Keywords: Environmental regulation; Innovation, Réglementation environnementale; Innovation (search for similar items in EconPapers)
JEL-codes: O31 Q2 (search for similar items in EconPapers)
Date: 1995-02-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://cirano.qc.ca/files/publications/95s-11.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:cir:cirwor:95s-11

Access Statistics for this paper

More papers in CIRANO Working Papers from CIRANO Contact information at EDIRC.
Bibliographic data for series maintained by Webmaster ().