TITLE

What determines the technology adoption of firms under optimal tax?

AUTHOR(S)
She, Chih-Min
PUB. DATE
May 2015
SOURCE
International Review of Economics & Finance;May2015, Vol. 37, p274
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
Technology adoption in a Cournot duopoly under optimal tax is studied. A benchmark model of laissez-faire economy shows that the chance of adoption increases in market size, a result ubiquitous in the paper. With optimal subsidy, adoption is more likely than in the laissez-faire economy. The chance is even higher if firms make adoption decisions before the government sets the tax rate. Negative externality of the commodity lowers the chance of adoption under optimal tax, but not below that in the laissez-faire economy unless the government moves first and the market is too small. However, if the new technology is clean, the chance of adoption can be significantly improved, even when the externality is only partially remedied. Moreover, a clean technology is more likely adopted than a technology without externality issue when the market is sufficiently large.
ACCESSION #
102316307

 

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