Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/127282
Authors: 
Perino, Grischa
Year of Publication: 
2008
Series/Report no.: 
Discussion Paper Series, University of Heidelberg, Department of Economics 467
Abstract: 
Most real world emission permit schemes are in effect hybrid instruments that feature both quantity and price controls. While the effects of price bounds are well understood for issues such as uncertain abatement costs it has not been investigated how such bounds affect time-consistency of environmental regulation and research incentives. The present paper analyzes these issues for two types of innovation. While price bounds increase static efficiency they reduce incentives to innovate. Commitment on details of a scheme’s design might be necessary to avoid the latter.
Subjects: 
Environmental Regulation
Hybrid Instruments
Innovation
Time-inconsistency
JEL: 
Q55
H23
O33
L51
Document Type: 
Working Paper

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