Adoption incentives and environmental policy timing under asymmetric information and strategic firm behaviour
We consider the incentives of a single firm to invest in a cleaner technology under emission quotas and emission taxation. We assume asymmetric information about the firm's cost of employing the new technology. Policy is set either before the firm invests (commitment) or after (time consistency...
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| Format: | Article |
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Springer Verlag
2017
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| Online Access: | https://eprints.nottingham.ac.uk/44041/ |
| _version_ | 1848796823621206016 |
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| author | D'Amato, Alessio Dijkstra, Bouwe |
| author_facet | D'Amato, Alessio Dijkstra, Bouwe |
| author_sort | D'Amato, Alessio |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | We consider the incentives of a single firm to invest in a cleaner technology under emission quotas and emission taxation. We assume asymmetric information about the firm's cost of employing the new technology. Policy is set either before the firm invests (commitment) or after (time consistency). Contrary to conventional wisdom, we find that with commitment (time consistency), quotas give higher (lower) investment incentives than taxes. With quotas (taxes), commitment generally leads to higher (lower) welfare than time consistency. Under commitment with quadratic abatement costs and environmental damages, a modified Weitzman rule applies and quotas usually lead to higher welfare than taxes. |
| first_indexed | 2025-11-14T19:54:06Z |
| format | Article |
| id | nottingham-44041 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T19:54:06Z |
| publishDate | 2017 |
| publisher | Springer Verlag |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-440412020-05-04T18:50:40Z https://eprints.nottingham.ac.uk/44041/ Adoption incentives and environmental policy timing under asymmetric information and strategic firm behaviour D'Amato, Alessio Dijkstra, Bouwe We consider the incentives of a single firm to invest in a cleaner technology under emission quotas and emission taxation. We assume asymmetric information about the firm's cost of employing the new technology. Policy is set either before the firm invests (commitment) or after (time consistency). Contrary to conventional wisdom, we find that with commitment (time consistency), quotas give higher (lower) investment incentives than taxes. With quotas (taxes), commitment generally leads to higher (lower) welfare than time consistency. Under commitment with quadratic abatement costs and environmental damages, a modified Weitzman rule applies and quotas usually lead to higher welfare than taxes. Springer Verlag 2017-06-19 Article PeerReviewed D'Amato, Alessio and Dijkstra, Bouwe (2017) Adoption incentives and environmental policy timing under asymmetric information and strategic firm behaviour. Environmental Economics and Policy Studies . ISSN 1867-383X Asymmetric information Commitment Rime consistency Emission taxation Quotas https://link.springer.com/article/10.1007%2Fs10018-017-0187-4 doi:10.1007/s10018-017-0187-4 doi:10.1007/s10018-017-0187-4 |
| spellingShingle | Asymmetric information Commitment Rime consistency Emission taxation Quotas D'Amato, Alessio Dijkstra, Bouwe Adoption incentives and environmental policy timing under asymmetric information and strategic firm behaviour |
| title | Adoption incentives and environmental policy timing under asymmetric information and strategic firm behaviour |
| title_full | Adoption incentives and environmental policy timing under asymmetric information and strategic firm behaviour |
| title_fullStr | Adoption incentives and environmental policy timing under asymmetric information and strategic firm behaviour |
| title_full_unstemmed | Adoption incentives and environmental policy timing under asymmetric information and strategic firm behaviour |
| title_short | Adoption incentives and environmental policy timing under asymmetric information and strategic firm behaviour |
| title_sort | adoption incentives and environmental policy timing under asymmetric information and strategic firm behaviour |
| topic | Asymmetric information Commitment Rime consistency Emission taxation Quotas |
| url | https://eprints.nottingham.ac.uk/44041/ https://eprints.nottingham.ac.uk/44041/ https://eprints.nottingham.ac.uk/44041/ |