publication . Preprint . 2009

Incentives for innovation and adoption of new technology under emissions trading

Mandell, Svante;
Open Access
  • Published: 09 Oct 2009
Abstract
A common claim in both the public and academic debate is that a tradable emission permits scheme does not provide sufficient incentives for R&D investments. The present paper addresses R&D investments and penetration rates of new technology focusing on the specific characteristics of a tradable permits market. It is showed that a complex dependency between the emissions cap, the market price for emission permits, the price for technology once it is developed and the R&D investment decision add an additional layer to the ‘traditional’ market failures associated with R&D. Even though the cap and how it is calibrated in response to the introduction of new technolog...
Subjects
free text keywords: Tradable permits; Innovation; R&D; Policy; Dynamic inconsistency, jel:L51, jel:O31, jel:Q55, jel:Q58

Milliman, Scott R. and Raymond Prince (1989) Firm incentives to promote technological change in pollution control, Journal of Environmental Economics and Management, 17, 247- 265

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