@techreport{Moreno-Bromberg2011Pollution,
abstract = {This paper analyzes the dynamic incentives for technology adoption under a transferable permits system, which allows for strategic trading on the permit market. Initially, firms can invest both in low-emitting production technologies and trade permits. In the model, technology adoption and allowance price are generated endogenously and are inter-dependent. It is shown that the non-cooperative permit trading game possesses a pure-strategy Nash equilibrium, where the allowance value reflects the level of uncovered pollution (demand), the level of unused allowances (supply), and the technological status. These conditions are also satisfied when a price support instrument, which is contingent on the adoption of the new technology, is introduced. Numerical investigation confirms that this policy generates a floating price floor for the allowances, and it restores the dynamic incentives to invest. Given that this policy comes at a cost, a criterion for the selection of a self-financing policy (based on convex risk measures) is proposed and implemented.},
address = {M\"{u}nchen},
author = {Santiago Moreno-Bromberg and Luca Taschini},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {D80; H20; L50; Q50; 330; Emissionsrechte; Emissionshandel; Umweltschutzinvestition; Technologiewahl; Nichtkooperatives Spiel; Theorie},
language = {eng},
number = {3399},
publisher = {CESifo},
title = {Pollution permits, strategic trading and dynamic technology adoption},
type = {CESifo working paper: Energy and Climate Economics},
url = {http://hdl.handle.net/10419/46450},
year = {2011}
}
