Green Technology and Optimal Emissions Taxation
33 Pages Posted: 17 Mar 2014
There are 2 versions of this paper
Green Technology and Optimal Emissions Taxation
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: Suggested Citation