Unintended Impacts of Multiple Instruments on Technology Adoption

This paper analyzes unintended impacts of the interaction of multiple environmental policy instruments, specifically, the effects of tradable permits and seasonal direct regulations on adoption rates of advanced abatement technologies.

When environmental emergencies are exogenous, mixing direct regulations with tradable permits induces an inefficient rate of adoption, while tradable permits maximize social welfare. If endogenous, then tradable permits and emissions standards could eventually offer a higher level of social welfare.