Hart, Robert
- Department of Economics, Swedish University of Agricultural Sciences
Abstract
How do technology spillovers affect the relationship between emissions taxes and technological change? Without spillovers, a regulator applies Pigovian taxes which lead to a first-best optimum (optimal emissions and optimal technology investment). Given spillovers, Pigovian taxes are likely to be second-best optimal if emissions-saving technology and production technology are equally undersupplied; raising taxes above the Pigovian level boosts emissions-saving investment, but only at the expense of production investment. The technologies are equally undersupplied when there is a degree of symmetry between the sectors, and the economy is on a balanced growth path. On a transition path with rising atmospheric stocks and a high level of investment in emissions-saving technology, a regulator may raise carbon taxes above the Pigovian level in order to encourage investment in emissions-saving technology at the expense of production technology. I show this using both analytical and numerical results. (C) 2007 Elsevier Inc. All rights reserved.
Keywords
climate policy; carbon tax; technological change; knowledge spillovers
Published in
Journal of Environmental Economics and Management
2008, volume: 55, number: 2, pages: 194-212
Publisher: ACADEMIC PRESS INC ELSEVIER SCIENCE
SLU Authors
UKÄ Subject classification
Social Sciences
Environmental Sciences and Nature Conservation
Economics and Business
Publication identifier
- DOI: https://doi.org/10.1016/j.jeem.2007.06.004
Permanent link to this page (URI)
https://res.slu.se/id/publ/18191