Discussion Papers no. 536
An applied general equilibrium analysis
Timing of innovation policies when carbon emissions are restricted
This paper studies the timing of subsidies for environmental research and development (R&D) and how innovation policy is influenced by the costs of emissions. We use a dynamic computable general equilibrium (CGE) model with both general R&D and specific environmental R&D. We find two results that are important when subsidizing environmental R&D in order to target inefficiencies in the research markets. Firstly, the welfare gain from subsidies is larger when the costs of emissions are higher. This is because a high carbon tax increases the social (efficient) investment in environmental R&D, in excess of the private investment in R&D. Secondly, the welfare gain is greater when there is a falling time profile of the rate of subsidies for environmental R&D, rather than a constant or increasing profile. The reason is that the innovation externalities are larger in early periods.
Om publikasjonen
- Tittel
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Timing of innovation policies when carbon emissions are restricted. An applied general equilibrium analysis
- Ansvarlige
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Tom-Reiel Heggedal, Karl Jacobsen
- Serie og -nummer
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Discussion Papers no. 536
- Utgiver
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Statistics Norway
- Emne
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Discussion Papers
- Antall sider
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32
- Målform
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Engelsk
- Om Discussion Papers
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Discussion papers comprise research papers intended for international journals and books. A preprint of a Discussion Paper may be longer and more elaborate than a standard journal article as it may include intermediate calculations, background material etc.
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