Timing of innovation policies when carbon emissions are restricted: an applied general equilibrium analysis

Tom-Reiel Heggedal and Karl Jacobsen ()
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Karl Jacobsen: Statistics Norway, https://www.ssb.no/en/forskning/ansatte

Discussion Papers from Statistics Norway, Research Department

Abstract: This paper studies the timing of subsidies for environmental research and development (R&D) and how innovation policy is influenced by the costs of emissions. We use a dynamic computable general equilibrium (CGE) model with both general R&D and specific environmental R&D. We find two results that are important when subsidizing environmental R&D in order to target inefficiencies in the research markets. Firstly, the welfare gain from subsidies is larger when the costs of emissions are higher. This is because a high carbon tax increases the social (efficient) investment in environmental R&D, in excess of the private investment in R&D. Secondly, the welfare gain is greater when there is a falling time profile of the rate of subsidies for environmental R&D, rather than a constant or increasing profile. The reason is that the innovation externalities are larger in early periods.

Keywords: Applied general equilibrium; endogenous growth; research and development; carbon emissions. (search for similar items in EconPapers)
JEL-codes: E62 H31 O38 Q55 (search for similar items in EconPapers)
Date: 2008-04
New Economics Papers: this item is included in nep-ene, nep-env, nep-ino, nep-ipr, nep-pr~, nep-mac and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Timing of innovation policies when carbon emissions are restricted: An applied general equilibrium analysis (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ssb:dispap:536

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