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Fadaee, Mehdi ; Lambertini, Luca
(2011)
Using Auctions for Pollution Rights as Indirect Incentives for Investments in Green Technologies.
Bologna:
Dipartimento di Scienze economiche DSE,
p. 16.
DOI 10.6092/unibo/amsacta/4512.
In: Quaderni - Working Paper DSE
(729).
ISSN 2282-6483.
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Abstract
Acquired wisdom has it that the allocation of pollution rights to firms hinders their willingness to undertake uncertain R&D projects for environmental-friendly technologies. We revisit this issue in a model where firms strategically choose whether to participate in an auction to attain pollution permits, or instead invest in green R&D, to show that, somewhat counterintuitively, a side effect of the auction is in fact that of fostering environmental R&D in an admissible range of the model parameters.
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