Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
985866 | Resource and Energy Economics | 2006 | 21 Pages |
Abstract
This paper determines a firm’s profit-maximizing R&D response to an uncertain carbon tax, for two different R&D programs: cost reduction of low carbon energy technologies and emissions reductions of currently economic technologies. We find that optimal R&D does not increase monotonically in a carbon tax. R&D into alternative technologies increases only if the firm is flexible enough; R&D into conventional technologies first increases then decreases in a carbon tax. Firms that are very flexible may increase R&D into alternative technologies when the uncertainty surrounding a carbon tax is increased; otherwise firms will generally decrease R&D investment in uncertainty.
Related Topics
Physical Sciences and Engineering
Energy
Energy (General)
Authors
Erin Baker, Ekundayo Shittu,