A paler shade of green: Environmental policy under induced technical change

Di Maria, Corrado ORCID: https://orcid.org/0000-0002-3048-0506 and Smulders, Sjak (2017) A paler shade of green: Environmental policy under induced technical change. European Economic Review, 99. pp. 151-169. ISSN 0014-2921

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Abstract

Conventional wisdom argues that environmental policy is less costly if it induces the development of cleaner technologies. In contrast to this argument, we show that once the second-best nature of actual economies is taken into account, the cost of environmental policy may well be larger with induced technical change (ITC) than without. Thus, ITC may lower both the emissions reductions and the welfare gains associated with environmental policy. In an endogenous policy framework, ITC may reduce the desired stringency of the policy.

Item Type:	Article
Uncontrolled Keywords:	environmental policy,innovation policy,induced technical change,crowding-out,second-best policy
Faculty \ School:	Faculty of Social Sciences > School of Economics University of East Anglia Research Groups/Centres > Theme - ClimateUEA
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Environment, Resources and Conflict Faculty of Social Sciences > Research Groups > Economic Theory Faculty of Social Sciences > Research Groups > Applied Econometrics And Finance Faculty of Science > Research Centres > Centre for Social and Economic Research on the Global Environment (CSERGE) University of East Anglia Schools > Faculty of Science > Tyndall Centre for Climate Change Research Faculty of Science > Research Centres > Tyndall Centre for Climate Change Research
Related URLs:	http://www.sciencedirect.com/science/art...
Depositing User:	Pure Connector
Date Deposited:	11 Jan 2017 00:05
Last Modified:	14 Jun 2023 12:50
URI:	https://ueaeprints.uea.ac.uk/id/eprint/61984
DOI:	10.1016/j.euroecorev.2017.01.002

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