Green Technology and Optimal Emissions Taxation

33 Pages Posted: 17 Mar 2014

See all articles by Stuart McDonald

Stuart McDonald

University of Queensland - School of Economics

Joanna Poyago-Theotoky

University of East Anglia (UEA) - Norwich Business School; Australian National University (ANU) - College of Business and Economics; Rimini Center for Economic Analysis

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Date Written: March 2014

Abstract

We examine the impact of an optimal emissions tax on research and development of emission reducing green technology (E-R&D) in the presence of R&D spillovers. We show that the size and effectiveness of the optimal emissions tax depends on the type of the R&D spillover: input or output spillover. In the case of R&D input spillovers (where only knowledge spillovers are accounted for), the optimal emissions tax required to stimulate R&D is always higher than when there is an R&D output spillover (where abatement and knowledge spillovers exist simultaneously). We also find that optimal emissions taxation and cooperative R&D complement each other when R&D spillovers are small, leading to lower emissions.

Keywords: Environmental R&D, Green Technology, R&D Spillover, Emissions Tax.

JEL Classification: H23, L11, Q55

Suggested Citation

McDonald, Stuart and Poyago-Theotoky, Joanna, Green Technology and Optimal Emissions Taxation (March 2014). Available at SSRN: https://ssrn.com/abstract=2409839 or http://dx.doi.org/10.2139/ssrn.2409839

Stuart McDonald

University of Queensland - School of Economics ( email )

Brisbane, QLD 4072
Australia

Joanna Poyago-Theotoky (Contact Author)

University of East Anglia (UEA) - Norwich Business School ( email )

Norwich
NR4 7TJ
United Kingdom

Australian National University (ANU) - College of Business and Economics ( email )

Canberra
Australia

Rimini Center for Economic Analysis ( email )

Via Patara, 3
Rimini (RN), RN 47900
Italy

HOME PAGE: http://poyago-theotoky.com

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