{"id":3884,"date":"2011-05-01T14:39:58","date_gmt":"2011-05-01T14:39:58","guid":{"rendered":"https:\/\/www.lse.ac.uk\/granthaminstitute\/?post_type=publication&p=3884"},"modified":"2024-08-19T14:33:28","modified_gmt":"2024-08-19T13:33:28","slug":"pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45","status":"publish","type":"publication","link":"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\/","title":{"rendered":"Pollution permits, strategic trading and dynamic technology adoption"},"content":{"rendered":"\n

Working Paper 45<\/h2>\n

Abstract<\/h3>\n

This paper analyses the dynamic incentives for technology adoption under a transferable permits system, which allows for strategic trading on the permit market.<\/p>\n

Initially, firms can invest both in low-emitting production technologies and trade permits. In the model, technology adoption and allowance price are generated endogenously and are interdependent. It is shown that the non-cooperative permit trading game possesses a pure-strategy Nash equilibrium, where the allowance value reflects the level of uncovered pollution (demand), the level of unused allowances (supply), and the technological status.<\/p>\n

These conditions are also satisfied when a price support instrument, which is contingent on the adoption of the new technology, is introduced. Numerical investigation confirms that this policy generates a floating price floor for the allowances, and it restores the dynamic incentives to invest.<\/p>\n

Given that this policy comes at a cost, a criterion for the selection of a self-financing policy (based on convex risk measures) is proposed and implemented.<\/p>\n

Santiago Moreno-Bromberg and Luca Taschini<\/p>\n\n","protected":false},"excerpt":{"rendered":"\n

Working Paper 45 Abstract This paper analyses the dynamic incentives for technology adoption under a transferable permits system, which allows…<\/p>\n\n","protected":false},"author":43,"featured_media":0,"template":"","tags":[869,427,841],"publication-type":[435],"topic_area":[4694],"class_list":["post-3884","publication","type-publication","status-publish","hentry","tag-emission-permits","tag-low-carbon-technology","tag-trading-decisions","publication-type-working-papers","topic_area-policy-evaluation"],"acf":{"downloads":{"ref_value":"field_52f16cc1a80f2","value":["https:\/\/www.lse.ac.uk\/granthaminstitute\/wp-content\/uploads\/2014\/02\/WP45_pollution-permits-trading-technology.pdf"],"type":"download","post_type":""},"profile_link":{"ref_value":"field_52f164b5189e9","value":["luca-taschini"],"type":"relationship","post_type":"profile"},"spotlight":{"ref_value":"field_52f80896506d3","value":"","type":false,"post_type":""},"exclude_from_sync":{"ref_value":"field_560538b0e7350","value":"0","type":false,"post_type":""},"rss_newsletter":{"ref_value":"field_54f5c2c1544d8","value":"","type":false,"post_type":""}},"yoast_head":"\nPollution permits, strategic trading and dynamic technology adoption - Grantham Research Institute on climate change and the environment<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Pollution permits, strategic trading and dynamic technology adoption - Grantham Research Institute on climate change and the environment\" \/>\n<meta property=\"og:description\" content=\"Working Paper 45 Abstract This paper analyses the dynamic incentives for technology adoption under a transferable permits system, which allows...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\/\" \/>\n<meta property=\"og:site_name\" content=\"Grantham Research Institute on climate change and the environment\" \/>\n<meta property=\"article:modified_time\" content=\"2024-08-19T13:33:28+00:00\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Estimated reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/publication\\\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\\\/\",\"url\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/publication\\\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\\\/\",\"name\":\"Pollution permits, strategic trading and dynamic technology adoption - Grantham Research Institute on climate change and the environment\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/#website\"},\"datePublished\":\"2011-05-01T14:39:58+00:00\",\"dateModified\":\"2024-08-19T13:33:28+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/publication\\\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\\\/#breadcrumb\"},\"inLanguage\":\"en-GB\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/publication\\\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\\\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/publication\\\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Publications\",\"item\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/?post_type=publication\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"All research\",\"item\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/publication-type\\\/new-research\\\/\"},{\"@type\":\"ListItem\",\"position\":4,\"name\":\"Working paper\",\"item\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/publication-type\\\/working-papers\\\/\"},{\"@type\":\"ListItem\",\"position\":5,\"name\":\"Pollution permits, strategic trading and dynamic technology adoption\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/#website\",\"url\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/\",\"name\":\"Grantham Research Institute on climate change and the environment\",\"description\":\"The Grantham Research Institute at LSE carries out world-class research on climate change and the environment.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.lse.ac.uk\\\/granthaminstitute\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-GB\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Pollution permits, strategic trading and dynamic technology adoption - Grantham Research Institute on climate change and the environment","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\/","og_locale":"en_GB","og_type":"article","og_title":"Pollution permits, strategic trading and dynamic technology adoption - Grantham Research Institute on climate change and the environment","og_description":"Working Paper 45 Abstract This paper analyses the dynamic incentives for technology adoption under a transferable permits system, which allows...","og_url":"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\/","og_site_name":"Grantham Research Institute on climate change and the environment","article_modified_time":"2024-08-19T13:33:28+00:00","twitter_card":"summary_large_image","twitter_misc":{"Estimated reading time":"1 minute"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\/","url":"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\/","name":"Pollution permits, strategic trading and dynamic technology adoption - Grantham Research Institute on climate change and the environment","isPartOf":{"@id":"https:\/\/www.lse.ac.uk\/granthaminstitute\/#website"},"datePublished":"2011-05-01T14:39:58+00:00","dateModified":"2024-08-19T13:33:28+00:00","breadcrumb":{"@id":"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\/#breadcrumb"},"inLanguage":"en-GB","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication\/pollution-permits-strategic-trading-and-dynamic-technology-adoption-working-paper-45\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.lse.ac.uk\/granthaminstitute\/"},{"@type":"ListItem","position":2,"name":"Publications","item":"https:\/\/www.lse.ac.uk\/granthaminstitute\/?post_type=publication"},{"@type":"ListItem","position":3,"name":"All research","item":"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication-type\/new-research\/"},{"@type":"ListItem","position":4,"name":"Working paper","item":"https:\/\/www.lse.ac.uk\/granthaminstitute\/publication-type\/working-papers\/"},{"@type":"ListItem","position":5,"name":"Pollution permits, strategic trading and dynamic technology adoption"}]},{"@type":"WebSite","@id":"https:\/\/www.lse.ac.uk\/granthaminstitute\/#website","url":"https:\/\/www.lse.ac.uk\/granthaminstitute\/","name":"Grantham Research Institute on climate change and the environment","description":"The Grantham Research Institute at LSE carries out world-class research on climate change and the environment.","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.lse.ac.uk\/granthaminstitute\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-GB"}]}},"taxonomies":{"post_tag":["Emission permits","low carbon technology","trading decisions"],"publication-type":["Working paper"],"topic_area":["Policy evaluation"]},"_links":{"self":[{"href":"https:\/\/www.lse.ac.uk\/granthaminstitute\/wp-json\/wp\/v2\/publication\/3884","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lse.ac.uk\/granthaminstitute\/wp-json\/wp\/v2\/publication"}],"about":[{"href":"https:\/\/www.lse.ac.uk\/granthaminstitute\/wp-json\/wp\/v2\/types\/publication"}],"author":[{"embeddable":true,"href":"https:\/\/www.lse.ac.uk\/granthaminstitute\/wp-json\/wp\/v2\/users\/43"}],"version-history":[{"count":1,"href":"https:\/\/www.lse.ac.uk\/granthaminstitute\/wp-json\/wp\/v2\/publication\/3884\/revisions"}],"predecessor-version":[{"id":74493,"href":"https:\/\/www.lse.ac.uk\/granthaminstitute\/wp-json\/wp\/v2\/publication\/3884\/revisions\/74493"}],"wp:attachment":[{"href":"https:\/\/www.lse.ac.uk\/granthaminstitute\/wp-json\/wp\/v2\/media?parent=3884"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lse.ac.uk\/granthaminstitute\/wp-json\/wp\/v2\/tags?post=3884"},{"taxonomy":"publication-type","embeddable":true,"href":"https:\/\/www.lse.ac.uk\/granthaminstitute\/wp-json\/wp\/v2\/publication-type?post=3884"},{"taxonomy":"topic_area","embeddable":true,"href":"https:\/\/www.lse.ac.uk\/granthaminstitute\/wp-json\/wp\/v2\/topic_area?post=3884"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}