The Timing of Adoption of Cleaner Technologies: Private Costs and Public Incentives
Date
01.01.2000
01.01.2000
Authors
Cesare Dosi
JEL Code
Q28,O38
Q28,O38
Keywords:
Environmental policy,technological change,irreversibility,network externalities,public incentives
Environmental policy,technological change,irreversibility,network externalities,public incentives
Publisher
Climate Change and Sustainable Development
Climate Change and Sustainable Development
Editor
Carlo Carraro
Carlo Carraro
Spontaneous adoption of cleaner technologies can be slowed down by various sources of inertia. Investment irreversibility, uncertainty about the actual private benefits, and the expectation of declining adoption costs due to the diffusion of environmental innovation, may involve a timing of technological migration incompatible with avoidance of excessive pollutant accumulation. In this paper we examine the implications of the sources of inertia on the design of public incentives aimed at accelerating abandonment of polluting technologies when the policy-maker faces incomplete information about the private switching costs.