Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/159124
Authors: 
Denicolo, Vincenzo
Year of Publication: 
1997
Series/Report no.: 
Quaderni - Working Paper DSE 281
Abstract: 
This paper compares the effects of taxes and pollution permits when a pollution-reducing innovations in prospect. When the government is the pre-committed into a fixed environmental policy but can freely adjust the level of taxes and permits after the innovation has been obtained, taxes and permits are fully equivalent. The equivalence breaks down, however, when the government can pre-commit. In this case, taxes give a higher incentive to invest in R&D than permits when the post-innovation output level is sufficiently high. The welfare ranking of taxes and permits is then analyzed. Loosely speaking, taxes are superior when the social damage associated with pollution is not too high.
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Working Paper

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