Journal article
On the Impact of Innovation on the Marginal Abatement Cost Curve
Journal of public economic theory, Vol.10(6), pp.985-1010
12/2008
DOI: 10.1111/j.1467-9779.2008.00393.x
Abstract
When modeling the effects of innovation on the marginal abatement cost (MAC) curve, many studies in environmental economics have posited, implicitly or explicitly, a uniform downward shift. The purpose of this paper is to thoroughly investigate this claim in a simple theoretical framework by introducing innovation in the production function of a price-taking, polluting firm in four economically meaningful ways. We establish that the effects of innovation on the MAC curve depend critically on the specific type of innovation, and that only innovation in end-of-pipe technology leads to a uniform downward shift of the MAC curve. A second class of results points to the fact that for other types of innovation in the overall production process, the scope for an upward shift of the MAC curve in response to innovation is easier to justify theoretically. These results call for a re-appraisal of various results in environmental policy obtained in theoretical work relying on this postulate.
Details
- Title: Subtitle
- On the Impact of Innovation on the Marginal Abatement Cost Curve
- Creators
- Rabah Amir - University of ArizonaMarc Germain - University of LilleVincent van Steenberghe - UCLouvain
- Resource Type
- Journal article
- Publication Details
- Journal of public economic theory, Vol.10(6), pp.985-1010
- Publisher
- Wiley
- DOI
- 10.1111/j.1467-9779.2008.00393.x
- ISSN
- 1097-3923
- eISSN
- 1467-9779
- Number of pages
- 26
- Language
- English
- Date published
- 12/2008
- Academic Unit
- Economics
- Record Identifier
- 9984380527302771
Metrics
3 Record Views