Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/69570
Authors: 
Hintermann, Beat
Lange, Andreas
Year of Publication: 
2012
Series/Report no.: 
CESifo Working Paper: Energy and Climate Economics 4058
Abstract: 
We study the introduction of new technologies when their costs are subject to idiosyncratic uncertainty and can only be fully learned through individual experience. We set up a dynamic model of clean experience goods that replace old polluting consumption options and show how optimal regulation evolves over time. In our base setting where social and private learning incentives coincide, the optimal tax of the polluting consumption is increasing over time. However, if social and private learning incentives diverge, we show that it will be optimal to temporarily increase the tax rate beyond net marginal external damages to induce optimal learning, before reducing the tax rate to the steady-state level. Alternatively, one needs to complement the tax by subsidies for first-time users which will be phased out over time. Similar results apply if consumers have biased expectations. We therefore give a rationale for introductory subsidies of new, clean technologies and non-monotonic tax paths from a perspective of consumer learning.
Subjects: 
experience goods
dynamic regulation
learning by doing
new technology
externalities
pollution
JEL: 
D82
L51
H21
H23
Q52
Q55
Document Type: 
Working Paper

Files in This Item:
File
Size
275.87 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.