Pollution-Reducing Innovations Under Taxes or Permits

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Quaderni - Working Paper DSE ; No. 281

Classification and Topics

• Classification: Wirtschaft

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Denicolo, Vincenzo
• Event: Veröffentlichung
• (who): Alma Mater Studiorum - Università di Bologna, Dipartimento di Scienze Economiche (DSE)
• (where): Bologna
• (when): 1997

Further information

• DOI: doi:10.6092/unibo/amsacta/5030
• Handle: http://hdl.handle.net/10419/159124
• Last update: 10.03.2025, 11:42 AM CET