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Title:Does more stringent environmental regulation induce or reduce technology adoption? When the rate of technology adoption is inverted u-shaped PDF Logo
Authors:Perino, Grischa
Requate, Till
Issue Date:2012
Series/Report no.:Economics working paper / Christian-Albrechts-Universität Kiel, Department of Economics 2012-05
Abstract:We show that for a broad class of technologies the relationship between policy stringency and the rate of technology adoption is inverted U-shaped. This happens when the marginal abatement cost (MAC) curves of conventional and new technologies intersect, which invariably occurs when emissions are proportional to output and technological progress reduces emissions per output. This outcome does not result from policy failure. On the contrary, in social optimum, the relationship between the slope of the marginal damage curve and the rate of technology adoption is also inverted U-shaped. Under more general conditions, these curves can look even more complicated (e.g. such as inverted W-shaped).
Subjects:induced diffusion
environmental policy
JEL:Q55
Q52
Q58
H23
O33
Document Type:Working Paper
Appears in Collections:Economics Working Papers, Department of Economics, CAU Kiel

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