Prices vs. quantities: The effects on technology choice

• 成果类型: Article
• 署名作者: Krysiak, Frank C.
• 署名单位: University of Basel
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2007.11.003
• 发表日期: 2008
• 页码: 1275-1287
• 关键词: Regulation; technology choice; uncertainty; INVESTMENT; asymmetric information

摘要

It is well-known that price- and quantity-based regulation approaches provide different investment incentives. But usually, only the effect on the level of investment is studied. In this paper, we show that under uncertainty, they also lead to the adoption of different technologies due to the disparate risks that a regulated firm is exposed to. Different regulatory instruments induce different technologies and this effect cannot be compensated by varying the design of the instruments. Furthermore, price-based instruments lead to the adoption of a socially suboptimal technology, so that the inclusion of technology choice provides a bias in favor of a quantity-based regulation compared with Weitzman's (Weitzman, M.L., 1974. Prices vs. quantities. Review of Economic Studies 41; 477-491) criterion. (C) 2007 Elsevier B.V. All rights reserved.