On Refunding of Emission Taxes and Technology Diffusion

• We analyze the impacts on technology diffusion of an emission tax refunded in proportion to output market share — a policy modeled after existing systems in Sweden and France— and compare to the diffusion of an abatement technology under a standard emission tax. The results indicate that refunding can speed up diffusion if firms do not strategically influence the size of the refund. If they do, it is ambiguous whether diffusion is slower or faster than under a nonrefunded emission tax. Moreover, it is ambiguous whether refunding continues over time to provide larger incentives for technological upgrades than a nonrefunded emission tax, since the effects of refunding dissipate as the industry becomes cleaner. The overall conclusion is that the effects of refunding on technology diffusion critically depends on the regulated industry’s prior technological composition and its market structure.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Economics (hsv//eng)

Nyckelord

Emission tax; refund; abatement technology; technology diffusion; imperfect competition

Publikations- och innehållstyp

ref (ämneskategori)

art (ämneskategori)