Prince Nti - Academia.edu (original) (raw)
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Papers by Prince Nti
Inducing technological change is an important objective of environmental regulation. Frequently, ... more Inducing technological change is an important objective of environmental regulation. Frequently, there are several technological options that could, if developed, extenuate a given environmental problem. We consider the question how reliably policy-induced technological progress leads to the pursuit of the best technological options. We use a setting with a production and an R&D sector, with horizontal and vertical technological progress, technology-specific cost uncertainty, and time-limited patent protection. We show that only the current least-cost technology will be used and developed, if firms in the production sector are regulated with an emission tax or an emission standard. In contrast, a regulation based on permit trading can induce technological diversity in the production sector and thereby facilitate the development of several technologies in the R&D sector. Thus taxes and standards may lead to a technological lock-in into the current least-cost technology, whereas tradable permits can avoid this problem, albeit at the cost of slower technological progress.
Inducing technological change is an important objective of environmental regulation. Frequently, ... more Inducing technological change is an important objective of environmental regulation. Frequently, there are several technological options that could, if developed, extenuate a given environmental problem. We consider the question how reliably policy-induced technological progress leads to the pursuit of the best technological options. We use a setting with a production and an R&D sector, with horizontal and vertical technological progress, technology-specific cost uncertainty, and time-limited patent protection. We show that only the current least-cost technology will be used and developed, if firms in the production sector are regulated with an emission tax or an emission standard. In contrast, a regulation based on permit trading can induce technological diversity in the production sector and thereby facilitate the development of several technologies in the R&D sector. Thus taxes and standards may lead to a technological lock-in into the current least-cost technology, whereas tradable permits can avoid this problem, albeit at the cost of slower technological progress.