Nentjes A, de Vries F & Wiersma D (2007) Technology-forcing through environmental regulation. European Journal of Political Economy, 23 (4), pp. 903-916. https://doi.org/10.1016/j.ejpoleco.2007.01.004
This paper analyzes the demand characteristics of innovation in pollution abatement and the interaction between a regulator and a polluter under a technology-forcing policy. Important demand-driven determinants of innovation in pollution control are examined, such as uncertainties surrounding unexplored technologies, the length of the compliance period and the maximum abatement costs the regulator is willing to accept. We derive the formal condition that the regulator balances the marginal utility of emissions reduction against the marginal disutilities of a longer compliance time and the increased uncertainty about the feasibility of a more stringent standard.
Innovation; Technology-forcing; Standards; Environmental regulation
European Journal of Political Economy: Volume 23, Issue 4