search query: @indexterm taxation / total: 1872
reference: 22 / 1872
| Author: | Weber, T.A. Neuhoff, K. |
| Title: | Carbon markets and technological innovation |
| Journal: | Journal of Environmental Economics and Management
2010 : SEP, VOL. 60:2, p. 115-132 |
| Index terms: | taxation environmental policy technological innovation price control |
| Language: | eng |
| Abstract: | This paper inspects the effects of firm-level innovation in carbon-abatement technologies on optimal cap-and-trade programs with and without price controls. We outline optimal cap-and-trade regulation containing a price cap and a price floor, and compare it to the special cases of pure taxation and a mere emissions cap. Innovation shifts the tradeoff between price- and quantity-based programs towards quantity-based emissions trading schemes. More specifically, increased innovation effectiveness lowers the optimal emissions cap, and relaxes price controls unless the slope of the marginal environmental damage curve is small. As of the decrease in the emissions cap, innovative abatement technologies may lead to a higher expected carbon price to provide incentives for private R&D investments. The expected carbon price decreases when innovative technologies become widely used. |
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