Pollution-Reducing Innovations Under Taxes or Permits

Denicolo, Vincenzo (1997) Pollution-Reducing Innovations Under Taxes or Permits. Bologna: Dipartimento di Scienze economiche DSE, p. 20. DOI 10.6092/unibo/amsacta/5030. In: Quaderni - Working Paper DSE (281). ISSN 2282-6483.
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Abstract

This paper compares the effects of taxes and pollution permits when a pollution-reducing innovations in prospect. When the government is the pre-committed into a fixed environmental policy but can freely adjust the level of taxes and permits after the innovation has been obtained, taxes and permits are fully equivalent. The equivalence breaks down, however, when the government can pre-commit. In this case, taxes give a higher incentive to invest in R&D than permits when the post-innovation output level is sufficiently high. The welfare ranking of taxes and permits is then analyzed. Loosely speaking, taxes are superior when the social damage associated with pollution is not too high.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Denicolo, Vincenzo
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ISSN
2282-6483
DOI
Deposit date
05 Apr 2016 08:00
Last modified
05 Apr 2016 08:00
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