EconPapers    
Economics at your fingertips  
 

Green Paradox and Directed Technical Change: The Effects of Subsidies to Clean R&D

Julien Daubanes (), André Grimaud and Luc Rouge

No 743, IDEI Working Papers from Institut d'Économie Industrielle (IDEI), Toulouse

Abstract: The "green paradox" literature points out that environmental policies which are anticipated to become gradually more stringent over time may induce a more rapid extraction of fossil fuels, thus having a detrimental effect to the environment. The manifestation of such phenomena has been extensively studied in the case of taxes directly applied to the extraction of a polluting non-renewable resource and of subsidies applied to its non-polluting substitutes. This paper examines the effects of subsidies to "clean" R&D activities, aimed to improve the productivity of non-polluting substitutes. We borrow standard assumptions from the directed-technical-change literature to take a full account of the private incentives to perform R&D and of the patterns of complementarity/substitutability between dirty resource and clean non-resource sectors. We show that a gradual increase in relative subsidies to clean R&D activities does not have the adverse green paradox effect, which contradicts an earlier made conjecture. Instead, the presence of several R&D sectors implies arbitrages which give rise to other quite paradoxical results. However substitutable or complementary sectors are, and whatever the induced technological bias is, clean-R&D-support policies always enhance the long-run productivity of the resource and thus result in a less rapid extraction.

JEL-codes: O32 O41 Q32 (search for similar items in EconPapers)
Date: 2012-08
New Economics Papers: this item is included in nep-ene, nep-env and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://idei.fr/sites/default/files/medias/doc/wp/2012/wp_idei_743.pdf Full text (application/pdf)

Related works:
Working Paper: Green Paradox and Directed Technical Change: The Effect of Subsidies to Clean R&D (2013) Downloads
Working Paper: Green Paradox and Directed Technical Change: The Effects of Subsidies to Clean R&D (2012) Downloads
Working Paper: Green Paradox and Directed Technical Change: The Effects of Subsidies to Clean R&D (2012) Downloads
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:ide:wpaper:26272

Access Statistics for this paper

More papers in IDEI Working Papers from Institut d'Économie Industrielle (IDEI), Toulouse Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2024-07-16
Handle: RePEc:ide:wpaper:26272