Green Technology and Optimal Emissions Taxation

We examine the impact of an optimal emissions tax on research and development of emission reducing green technology (E-R&D) in the presence of R&D spillovers. We show that the size and effectiveness of the optimal emissions tax depends on the type of the R&D spillover: input or output spillover. In the case of R&D input spillovers (where only knowledge spillovers are accounted for), the optimal emissions tax required to stimulate R&D is always higher than when there is an R&D output spillover (where abatement and knowledge spillovers exist simultaneously). We also find that optimal emissions taxation and cooperative R&D complement each other when R&D spillovers are small, leading to lower emissions.


Issue Date:
2014-06
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/177305
Total Pages:
37
JEL Codes:
H23; L11; Q55
Series Statement:
CCSD
59.2014




 Record created 2017-04-01, last modified 2017-08-27

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