Scandinavian Working Papers in Economics
Working Papers in Economics,
University of Gothenburg, Department of Economics
No 573: On Refunding of Emission Taxes and Technology Diffusion
Jessica Coria () and Kristina Mohlin ()
Additional contact information
Jessica Coria: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O. Box 640, SE 40530 Gothenburg, Sweden
Kristina Mohlin: Department of Economics, School of Business, Economics and Law, Göteborg University, Postal: P.O. Box 640, SE 40530 Gothenburg, Sweden
Abstract: We analyze diffusion of an abatement technology in an imperfectly competitive industry under a standard emission tax compared to an emission tax which is refunded in proportion to output market share. The results indicate that refunding can speed up diffusion if firms do not strategically influence the size of the refund. If they do, it is ambiguous whether diffusion is slower or faster than under a non-refunded emission tax. Moreover, it is ambiguous whether refunding continues over time to provide larger incentives for technological upgrading than a non-refunded emission tax, since the effects of refunding dissipate as the overall industry becomes cleaner.
Keywords: emisson tax; refund; abatement technolgy; technology diffusion; imperfect competition
49 pages, October 9, 2013
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