Quota Markets and Technological Change

摘要: Quota or permit markets have become an important tool for climate and energy policy, as they not only promise allocative efficiency but also provide a market-based selection of the best new technological options. We analyze their effect on change in case where several technologies could be developed R&D firms are granted patents with finite lifetime. show that incentives too low, is well known, distorted across technologies, which result. Compared to social optimum, technology few cases, whereas less promising might often. This distortion difficult correct, information about usually missing. However, we combining quota market simple tax-subsidy scheme can correct some these distortions, even if regulator has no regarding properties technologies.