Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/44722
Authors: 
Year of Publication: 
2009
Series/Report no.: 
UFZ Discussion Paper No. 10/2009
Publisher: 
Helmholtz-Zentrum für Umweltforschung (UFZ), Leipzig
Abstract: 
Economic theory suggests that with a pollution externality and learning spillovers related to renewable energy technologies, the optimal climate policy mix includes an emissions policy and an output subsidy to the learning industry. Instead of output subsidies, feed-in tariffs are often implemented in addition to emissions policies. This paper reveals that this policy mix may theoretically provide for a first-best outcome as well. However, its efficient design may be cumbersome for regulators. An emissions tax must be below the Pigovian level and differentiate between fossil fuels. Moreover, both tax and feed-in tariff must be adapted continuously.
Subjects: 
Emissions tax
feed-in tariffs
policy mix
spillovers
learning by doing
JEL: 
D62
Q48
Q54
Q58
Document Type: 
Working Paper

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