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Does Technological Innovation Really Reduce Marginal Abatement Costs? Some Theory, Algebraic Evidence, and Policy Implications

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  • Yoram Bauman
  • Myunghun Lee
  • Karl Seeley

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  • Yoram Bauman & Myunghun Lee & Karl Seeley, 2008. "Does Technological Innovation Really Reduce Marginal Abatement Costs? Some Theory, Algebraic Evidence, and Policy Implications," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(4), pages 507-527, August.
    • Handle: RePEc:kap:enreec:v:40:y:2008:i:4:p:507-527
    DOI: 10.1007/s10640-007-9167-7
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    1. Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2003. "Chapter 11 Technological change and the environment," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 11, pages 461-516, Elsevier.
    2. Parry, Ian W H, 1998. "Pollution Regulation and the Efficiency Gains from Technological Innovation," Journal of Regulatory Economics, Springer, vol. 14(3), pages 229-254, November.
    3. Montero, Juan-Pablo, 2002. "Permits, Standards, and Technology Innovation," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 23-44, July.
    4. Smulders, Sjak & Gradus, Raymond, 1996. "Pollution abatement and long-term growth," European Journal of Political Economy, Elsevier, vol. 12(3), pages 505-532, November.
    5. Coggins, Jay S. & Swinton, John R., 1996. "The Price of Pollution: A Dual Approach to Valuing SO2Allowances," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 58-72, January.
    6. Parry, Ian W H & Pizer, William A & Fischer, Carolyn, 2003. "How Large Are the Welfare Gains from Technological Innovation Induced by Environmental Policies?," Journal of Regulatory Economics, Springer, vol. 23(3), pages 237-255, May.
    7. Biglaiser, Gary & Horowitz, John K, 1995. "Pollution Regulation and Incentives for Pollution-Control Research," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(4), pages 663-684, Winter.
    8. Helfand, Gloria E, 1991. "Standards versus Standards: The Effects of Different Pollution Restrictions," American Economic Review, American Economic Association, vol. 81(3), pages 622-634, June.
    9. Karen Palmer & Wallace E. Oates & Paul R. Portney & Karen Palmer & Wallace E. Oates & Paul R. Portney, 2004. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 3, pages 53-66, Edward Elgar Publishing.
    10. Bruneau, Joel F., 2004. "A note on permits, standards, and technological innovation," Journal of Environmental Economics and Management, Elsevier, vol. 48(3), pages 1192-1199, November.
    11. Requate, Till, 1998. "Incentives to innovate under emission taxes and tradeable permits," European Journal of Political Economy, Elsevier, vol. 14(1), pages 139-165, February.
    12. Till Requate, 1995. "Incentives to adopt new technologies under different pollution-control policies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(2), pages 295-317, August.
    13. Bohm, Peter & Russell, Clifford S., 1985. "Comparative analysis of alternative policy instruments," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 1, chapter 10, pages 395-460, Elsevier.
    14. Magat, Wesley A., 1978. "Pollution control and technological advance: A dynamic model of the firm," Journal of Environmental Economics and Management, Elsevier, vol. 5(1), pages 1-25, March.
    15. Milliman, Scott R. & Prince, Raymond, 1989. "Firm incentives to promote technological change in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 17(3), pages 247-265, November.
    16. Orr, Lloyd, 1976. "Incentive for Innovation as the Basis for Effluent Charge Strategy," American Economic Review, American Economic Association, vol. 66(2), pages 441-447, May.
    17. Di Maria Corrado & Smulders Sjak A., 2005. "Trade Pessimists vs Technology Optimists: Induced Technical Change and Pollution Havens," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(2), pages 1-27, January.
    18. Baumol,William J. & Oates,Wallace E., 1988. "The Theory of Environmental Policy," Cambridge Books, Cambridge University Press, number 9780521322249, January.
    19. Fare, Rolf, et al, 1993. "Derivation of Shadow Prices for Undesirable Outputs: A Distance Function Approach," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 374-380, May.
    20. Downing, Paul B. & White, Lawrence J., 1986. "Innovation in pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 13(1), pages 18-29, March.
    21. Jung, Chulho & Krutilla, Kerry & Boyd, Roy, 1996. "Incentives for Advanced Pollution Abatement Technology at the Industry Level: An Evaluation of Policy Alternatives," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 95-111, January.
    22. Fare, Rolf & Grosskopf, Shawna & Noh, Dong-Woon & Weber, William, 2005. "Characteristics of a polluting technology: theory and practice," Journal of Econometrics, Elsevier, vol. 126(2), pages 469-492, June.
    23. Mendelsohn, Robert, 1984. "Endogenous technical change and environmental regulation," Journal of Environmental Economics and Management, Elsevier, vol. 11(3), pages 202-207, September.
    24. Jeroen C.J.M. van den Bergh (ed.), 1999. "Handbook of Environmental and Resource Economics," Books, Edward Elgar Publishing, number 801.
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    Cited by:

    1. Mads Greaker & Cathrine Hagem, 2014. "Strategic Investment in Climate Friendly Technologies: The Impact of Global Emissions Trading," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(1), pages 65-85, September.
    2. Karp, Larry & Simon, Leo, 2013. "Participation games and international environmental agreements: A non-parametric model," Journal of Environmental Economics and Management, Elsevier, vol. 65(2), pages 326-344.
    3. Kesicki, Fabian, 2013. "What are the key drivers of MAC curves? A partial-equilibrium modelling approach for the UK," Energy Policy, Elsevier, vol. 58(C), pages 142-151.
    4. Noailly, Joëlle & Batrakova, Svetlana, 2010. "Stimulating energy-efficient innovations in the Dutch building sector: Empirical evidence from patent counts and policy lessons," Energy Policy, Elsevier, vol. 38(12), pages 7803-7817, December.
    5. Kneller, Richard & Manderson, Edward, 2012. "Environmental regulations and innovation activity in UK manufacturing industries," Resource and Energy Economics, Elsevier, vol. 34(2), pages 211-235.
    6. repec:hal:spmain:info:hdl:2441/4b9o704lm99vm9u7s9e6fdpp6r is not listed on IDEAS
    7. Perino, Grischa & Requate, Till, 2012. "Does more stringent environmental regulation induce or reduce technology adoption? When the rate of technology adoption is inverted U-shaped," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 456-467.
    8. Nicolli, Francesco & Vona, Francesco, 2016. "Heterogeneous policies, heterogeneous technologies: The case of renewable energy," Energy Economics, Elsevier, vol. 56(C), pages 190-204.
    9. David Tobón Orozco & Carlos Andrés Vasco Correa, 2011. "Un modelo de equilibrio general con externalidades y capital natural," Libros del Grupo Microeconomía Aplicada, Universidad de Antioquia, Departamento de Economía, edition 1, number 01, January-J.
    10. Miyuki Nagashima & Rob Dellink, 2008. "Technology spillovers and stability of international climate coalitions," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 8(4), pages 343-365, December.
    11. Bréchet, Thierry & Meunier, Guy, 2014. "Are clean technology and environmental quality conflicting policy goals?," Resource and Energy Economics, Elsevier, vol. 38(C), pages 61-83.
    12. Tim Friehe, 2013. "The Role of Investment in Environmental Lobbying Contests," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(3), pages 337-352, November.
    13. Popp, David & Newell, Richard G. & Jaffe, Adam B., 2010. "Energy, the Environment, and Technological Change," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 2, chapter 0, pages 873-937, Elsevier.
    14. Bouwe R. Dijkstra & Maria J. Gil‐Moltó, 2018. "Is emission intensity or output U‐shaped in the strictness of environmental policy?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(2), pages 177-201, April.
    15. Bonilla, Jorge & Coria, Jessica & Mohlin, Kristina & Sterner, Thomas, 2014. "Diffusion of NOx abatement technologies in Sweden," Working Papers in Economics 585, University of Gothenburg, Department of Economics.
    16. Alfred Endres & Bianca Rundshagen, 2013. "Incentives to Diffuse Advanced Abatement Technology Under the Formation of International Environmental Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(2), pages 177-210, October.
    17. Endres, Alfred & Friehe, Tim, 2011. "Incentives to diffuse advanced abatement technology under environmental liability law," Journal of Environmental Economics and Management, Elsevier, vol. 62(1), pages 30-40, July.
    18. Alfred Endres & Tim Friehe & Bianca Rundshagen, 2015. "“It’s All in the Mix!”- Internalizing externalities with R&D subsidies and environmental liability," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 44(1), pages 151-178, January.
    19. Raphael Calel, 2011. "Market-based instruments and technology choices: a synthesis," GRI Working Papers 57, Grantham Research Institute on Climate Change and the Environment.
    20. Di Maria, Corrado & Smulders, Sjak, 2017. "A paler shade of green: Environmental policy under induced technical change," European Economic Review, Elsevier, vol. 99(C), pages 151-169.
    21. Alfred Endres & Tim Friehe & Bianca Rundshagen, 2015. "Environmental liability law and R&D subsidies: results on the screening of firms and the use of uniform policy," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 17(4), pages 521-541, October.
    22. repec:spo:wpmain:info:hdl:2441/4b9o704lm99vm9u7s9e6fdpp6r is not listed on IDEAS
    23. Endres, Alfred & Friehe, Tim, 2011. "R&D and abatement under environmental liability law: Comparing incentives under strict liability and negligence if compensation differs from harm," Energy Economics, Elsevier, vol. 33(3), pages 419-425, May.
    24. D’Amato, Alessio & Dijkstra, Bouwe R., 2015. "Technology choice and environmental regulation under asymmetric information," Resource and Energy Economics, Elsevier, vol. 41(C), pages 224-247.
    25. Halkos, George & Tzeremes, Nickolaos & Kourtzidis, Stavros, 2014. "Abating CO2 emissions in the Greek energy and industry sectors," MPRA Paper 60807, University Library of Munich, Germany.

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    More about this item

    Keywords

    Marginal abatement costs; Production process innovations; Technological change; O38; Q28;
    All these keywords.

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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