Taxes versus permits as incentive for the intertemporal supply of a clean technology by a monopoly

摘要

This paper investigates the intertemporal monopolistic supply ofa clean technology and addresses the following questions: Howdoes the lack of governments to commit restrict the incentivesand thereby the supply of clean technologies? Are either emissiontaxes or emission permits better suited in such a dynamic setting?Although the monopoly can be forced to price taking behaviour, theinability of governments to commit leads to too slow and to too littleexpansion. Prices and quantities are equivalent for different kindsof government's objectives. An (important) exception is the case ofnon-competitive supply of the dirty input: taxes dominate from awelfare perspective however due to the additional scope to accruerents and not due to an improvement of incentives for the devel-opment of clean technologies. Permits eliminate pollution entirely,which fosters the expansion of the clean technology