Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82649
Authors: 
Ben Jebli, Mehdi
Ben Youssef, Slim
Year of Publication: 
2013
Series/Report no.: 
Economics Discussion Papers 2013-50
Abstract: 
The authors consider a symmetric model composed of two countries and a firm in each country. Firms produce the same good by means of a polluting technology which uses fossil energy. However, these firms can adopt a clean technology which uses a renewable energy having a lower unit cost. Surprisingly, opening markets to international competition increases the per-unit emission-tax and decreases the per-unit production subsidy. Interestingly, the socially optimal adoption date under a common market better internalizes transboundary pollution than that under autarky. It also better internalizes transboundary pollution compared with the optimal adoption dates for firms. In autarky (resp. a common market), firms adopt the clean technology earlier (resp. later) than what is socially optimal and, therefore, regulators can induce clean technology adoption at the socially optimal adoption date by giving firms postpone (resp. speed up) adoption subsidies. Opening markets to international trade, speeds up socially optimal adoption dates and delays optimal adoption dates for firms. Consequently, with market opening, speed up adoption subsidies are needed to reduce the global flow of pollution.
Subjects: 
regulation
adoption date
renewable energy
transboundary pollution
common
JEL: 
D62
F18
H57
Q42
Q55
Creative Commons License: 
http://creativecommons.org/licenses/by/3.0/
Document Type: 
Working Paper

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