Pollution permits and environmental innovation Export

@article{Laffont&Tirole1996, abstract = {This paper starts with a warning about the negative impact of plain pollution allowance markets on environmental pollution innovation. Stand-alone spot markets enable the government to expropriate an innovation by offering a competing 'technology' (pollution permits) that puts an arbitrary downward pressure on the licensing price. Advance allowances reduce expropriation but still create suboptimal incentives for innovation. They have the further drawback that permits are inefficiently used when the innovation occurs. Options to pollute at a given striking price fare better than allowances because they create private incentives to phase out pollution in the case of innovation. We characterize the social optimum and show that it can be implemented by issuing options to pollute, inter alia. Finally, the paper compares ex ante and ex post government procurement. Surprisingly, ex post licensing by the innovator to the government may yield a higher licensing fee than an ex ante contract.}, author = {Laffont, Jean-Jaques and Tirole, Jean}, citeulike-article-id = {4509601}, citeulike-linkout-0 = {http://dx.doi.org/10.1016/0047-2727(96)01576-9}, citeulike-linkout-1 = {http://linkinghub.elsevier.com/retrieve/pii/0047-2727(96)01576-9}, doi = {10.1016/0047-2727(96)01576-9}, issn = {00472727}, journal = {Journal of Public Economics}, keywords = {climate\_governance, time\_inconsistency}, month = {October}, number = {1-2}, pages = {127--140}, posted-at = {2009-05-13 10:31:45}, priority = {2}, title = {Pollution permits and environmental innovation}, url = {http://dx.doi.org/10.1016/0047-2727(96)01576-9}, volume = {62}, year = {1996} }

TY - JOUR ID - Laffont&Tirole1996 L3 - citeulike-article-id:4509601 N2 - This paper starts with a warning about the negative impact of plain pollution allowance markets on environmental pollution innovation. Stand-alone spot markets enable the government to expropriate an innovation by offering a competing ‘technology’ (pollution permits) that puts an arbitrary downward pressure on the licensing price. Advance allowances reduce expropriation but still create suboptimal incentives for innovation. They have the further drawback that permits are inefficiently used when the innovation occurs. Options to pollute at a given striking price fare better than allowances because they create private incentives to phase out pollution in the case of innovation. We characterize the social optimum and show that it can be implemented by issuing options to pollute, inter alia. Finally, the paper compares ex ante and ex post government procurement. Surprisingly, ex post licensing by the innovator to the government may yield a higher licensing fee than an ex ante contract. IS - 1-2 JF - Journal of Public Economics SN - 00472727 EP - 140 TI - Pollution permits and environmental innovation VL - 62 SP - 127 KW - climate_governance KW - time_inconsistency AU - Laffont, Jean-Jaques AU - Tirole, Jean PY - 1996/10// UR - http://dx.doi.org/10.1016/0047-2727(96)01576-9 ER -