Regulatory Choice with Pollution and Innovation

Charles Kolstad

No 16303, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops a simple model of a polluting industry and an innovating firm. The polluting industry is faced with regulation and costly abatement. Regulation may be taxes or marketable permits. The innovating firm invests in R&D and develops technologies which reduce the cost of pollution abatement. The innovating firm can patent this innovation and use a licensing fee to generate revenue. In a world of certainty, the first best level of innovation and abatement can be supported by either a pollution tax or a marketable permit. However, the returns to the innovator from innovation are not the same under the two regimes. A marketable permit system allows the innovator to capture all of the gains to innovation; a tax system involves sharing the gains of innovation between the innovator and the polluting industry.

JEL-codes: L51 Q55 Q58 (search for similar items in EconPapers)
Date: 2010-08
New Economics Papers: this item is included in nep-ene, nep-env, nep-ino and nep-reg
Note: EEE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published as Regulatory Choice with Pollution and Innovation , Charles D. Kolstad. in The Design and Implementation of US Climate Policy , Fullerton and Wolfram. 2012

Downloads: (external link)
http://www.nber.org/papers/w16303.pdf (application/pdf)

Related works:
Chapter: Regulatory Choice with Pollution and Innovation (2011)
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:nbr:nberwo:16303

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w16303

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().