A Note on Clean Technology Adoption and its Influence on Tradeable Emission Permits Prices
2011
Sanin, María-Eugenia | Zanaj, Skerdilajda
In this paper, we give an example in which the price of tradable emission permits increases despite firms' adoption of less polluting technology, a result that is in contrast with Montero (J Environ Econ 44:23-44, 2002) and Parry (J Regul Econ 14:229-254, 1998), among others. If two Cournot players switch to a cleaner technology, the price for permits may increase due to an increase in the net demand for permits and a decrease in the net supply of permits after the clean technology is adopted. This is only the case when output demand is quite elastic.
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