Market Structure and Technology Diffusion Incentives under Emission Taxes and Emission Reduction Subsidies - 10.1628/093245607781261388 - Mohr Siebeck
Economics

Frans P. de Vries

Market Structure and Technology Diffusion Incentives under Emission Taxes and Emission Reduction Subsidies

Volume 163 () / Issue 2, pp. 256-268 (13)

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This paper compares emission taxes with emission reduction subsidies regarding the incentives they create to enhance technology diffusion under imperfect competition. Firms can adopt a »dirty« technology or a »clean« abatement technology. If the clean and dirty products are perfect substitutes, and clean firms face a net absolute advantage over dirty firms, taxes provide the strongest incentive. This ranking is reversed if there is a distortion on output. Subsidies can neutralize this distortion because output supply is stimulated, which would normally be lower than optimal under perfect competition.
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Frans P. de Vries No current data available.