Abatement R&D, Market Imperfections, and Environmental Policy in an Endogenous Growth Model

Hsun Chu and Ching-chong Lai

MPRA Paper from University Library of Munich, Germany

Abstract: This paper develops an endogenous growth model featuring environmental externalities, abatement R&D, and market imperfections. We compare the economic performances under three distinct regimes that encompass public abatement, private abatement without tax recycling, and private abatement with tax recycling. It is found that the benefit arising from the private conduct of abatement will be larger if the degree of the firms’ monopoly power is greater. With a reasonably high degree of monopoly power, a mixed abatement policy by which the government recycles environmental tax revenues to subsidize the private abatement R&D is a plausible way of reaching the highest growth rate and welfare.

Keywords: abatement R&D; market imperfections; endogenous growth (search for similar items in EconPapers)
JEL-codes: H23 O32 O44 Q56 (search for similar items in EconPapers)
Date: 2013-11, Revised 2013-11
New Economics Papers: this item is included in nep-dge, nep-ene, nep-env, nep-gro, nep-ino, nep-pbe and nep-res
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Journal Article: Abatement R&D, market imperfections, and environmental policy in an endogenous growth model (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:52869

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