001124620 001__ 1124620 001124620 005__ 20201025093804.0 001124620 035__ $$a(bepress)7559605 001124620 035__ $$a(bepress-path)facpubs/2502 001124620 037__ $$aIR 001124620 245__ $$aCap-and-Trade, Emissions Taxes, and Innovation 001124620 264_1 $$c2011-01 001124620 269__ $$a2011-01 001124620 520__ $$a<p>Emissions taxes and carbon caps can both lead to efficient production of energy, in the sense of controlling carbon emissions to the extent that is efficient with existing technologies. However, the regulatory policy has a second objective, which is to create incentives to develop lower-carbon technologies. With both objectives in mind, does one policy dominate the other? The answer depends partly on whether the regulated price of energy is in the elastic or inelastic part of the demand curve. It also depends on the size of the improvement. Under tax regulation, an innovator can always profit from diffusing the clean technology to all producers. This is not true under a carbon cap because diffusion expands energy supply, reducing the price of energy and of allowances and eroding the producers' willingness to pay for licenses. Under cap-and-trade regulation, the regulator has less ability to control the price of energy while ensuring productive efficiency (full diffusion). Because there is little incentive to invest in a larger improvement than will be fully diffused, cap-and-trade regulation limits innovation in a way that is avoided by a tax.</p> 001124620 524__ $$aCap-and-Trade, Emissions Taxes, and Innovation, 11 Innovation Pol'y & Econ. 29 (2011) 001124620 653__ $$aLaw 001124620 655_7 $$aArticle 001124620 7001_ $$aScotchmer, Suzanne$$uBerkeley Law 001124620 773__ $$q29$$pInnovation Pol'y & Econ.$$tInnovation Policy and the Economy$$j11 001124620 8564_ $$s800583$$uhttp://lawcat.berkeley.edu/record/1124620/files/fulltext.pdf 001124620 909CO $$ooai:lawcat.berkeley.edu:1124620$$pir 001124620 910__ $$a2502 001124620 95641 $$uhttps://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?article=3503&context=facpubs&unstamped=1$$zbepress url 001124620 982__ $$aFaculty Scholarship 001124620 983__ $$a<span style="color:#FF5619">Scholarship Repository</span>