Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/265966 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9931
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Green innovation is essential for climate change mitigation, but not all innovative projects deliver equal social value. We consider innovator heterogeneity in a model where the policy maker cannot observe innovation quality and directly subsidize the socially most valuable green innovations. We find that carbon pricing works as an innovation screening device; this creates a premium on the optimal carbon price, raising it above the Pigouvian level. We identify conditions for perfect screening and generalize results to screening policies under alternative intellectual property regimes and complementary policies.
Subjects: 
carbon pricing
green innovation
optimal policy
R&D
screening
JEL: 
O30
H23
Q55
Q58
Document Type: 
Working Paper
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