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| Author: | Fischer, C. Parry, I. W. H. Pizer, W. A. |
| Title: | Instrument Choice for Environmental Protection When Technological Innovation is Endogenous |
| Journal: | Journal of Environmental Economics and Management
2003 : MAY, VOL. 45:3, p. 523-545 |
| Index terms: | TECHNOLOGICAL INNOVATION EXTERNALITIES ENVIRONMENTAL POLICY WELFARE |
| Language: | eng |
| Abstract: | This paper compares, qualitatively and quantitatively, the welfare effects of emissions taxes, auctioned emissions permits, and free (grandfathered) permits, when technological innovation is endogenous. The authors find that there is no unambiguous case for preferring any of these policy instruments. The relative welfare ranking of instruments depends on the costs of innovation, the extent to which innovations can be imitated, the slope and level of the marginal environmental benefit function, and the number of polluting firms. The authors illustrate the types of situations when there can be significant welfare discrepancies between the policies and when there are not. |
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