On reducing the windfall profits in environmental subsidy programs

C. Arguedas, D.P. van Soest

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Investment subsidies are widely used to induce adoption of new technologies that can lower the (marginal) cost of reducing emissions. To economize on these subsidies, governments would like to distinguish between firms that need to receive a subsidy to adopt a new technology, and firms that would adopt that technology even without subsidies. We show that policies consisting of a menu of emission taxes and investment subsidies can potentially induce firms to self-select.
Original languageEnglish
Pages (from-to)192-205
JournalJournal of Environmental Economics and Management
Volume58
Issue number2
Publication statusPublished - 2009

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environmental subsidy
programme
profit
windfall
subsidy
Windfall
Subsidies
Profit
Investment subsidies
cost
firm
new technology
Marginal cost
Emission taxes
Government subsidies
Tax subsidies
Menu
tax
policy

Cite this

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On reducing the windfall profits in environmental subsidy programs. / Arguedas, C.; van Soest, D.P.

In: Journal of Environmental Economics and Management, Vol. 58, No. 2, 2009, p. 192-205.

Research output: Contribution to journalArticleScientificpeer-review

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AB - Investment subsidies are widely used to induce adoption of new technologies that can lower the (marginal) cost of reducing emissions. To economize on these subsidies, governments would like to distinguish between firms that need to receive a subsidy to adopt a new technology, and firms that would adopt that technology even without subsidies. We show that policies consisting of a menu of emission taxes and investment subsidies can potentially induce firms to self-select.

M3 - Article

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JO - Journal of Environmental Economics and Management

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