Emission regulation: Prices, quantities and hybrids with endogenous technology choice
研究了基于市场的排放监管如何影响企业技术投资，发现完全无弹性的排放配额供给才能实现社会最优技术选择；不确定性下，对排放方差大的技术征税是最优的；价格稳定措施可能扭曲技术投资并加剧产品价格波动。
This paper examines the investment incentives of market-based regulation, focusing on the technology characteristics that different regulatory schemes tend to incentivize. The firms’ technology choice is socially optimal if and only if the aggregate emission allowance supply is completely inelastic. Furthermore, in the presence of uncertainty, elastic emission allowance supply, and strictly convex environmental damage, it is optimal to tax investments in technologies that induce a large variance in emissions. Lastly, price elastic supply of emission allowances may either increase or decrease the volatility in the product market, depending on the risk environment the firms face. The results indicate that introduction of permit price-stabilizing measures in an emission trading system will come at the cost of suboptimal technology investments, and may also lead to increased fluctuations in product prices.