Environmental policy, technology adoption and the size distribution of firms

Abstract

The potential impacts of strict environmental policies on production costs and firms' competitiviness are central to the choice of which policy to implement. However, not all the industries nor all firms within an industry are affected in the same way. In this paper, we investigate the effects of emission taxes, uniform emission standards, and performance standards on the size distribution of firms. Our results indicate that, unlike emission taxes and performance standards, emission standards introduce regulatory asymmetries favoring small firms. On the contrary, emission taxes and performance standards reduce to a lower extent profits of larger firms but they do modify the optimal scale of firms. We also show that when the regulatory asymmetries created by emissions standards are taken into account, the profitability of emissions reducing technologies is higher under emission standards than under market-based instruments. (C) 2018 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).

Keywords

Environmental regulations; Energy efficiency; Size distribution; Emission taxes; Emission standards; Performance standards

Published in

Energy Economics
2018, volume: 72, pages: 470-485

SLU Authors

• Kyriakopoulou, Efthymia

  • Department of Economics, Swedish University of Agricultural Sciences
    
  • University of Luxembourg

Global goals (SDG)

SDG7 Affordable and clean energy
SDG8 Decent work and economic growth
SDG9 Industry, innovation and infrastructure
SDG12 Responsible consumption and production

UKÄ Subject classification

Economics

Publication identifier

• DOI: https://doi.org/10.1016/j.eneco.2018.04.025

Permanent link to this page (URI)

https://res.slu.se/id/publ/96160