Template-type: ReDIF-Paper 1.0
Author-Name: Ziesemer, Thomas
Author-Email: t.ziesemer@algec.unimaas.nl
Author-Workplace-Name: University of Maastricht, Faculty of Economics 
Author-Name: Kriechel, Ben
Author-Email: Ben.Kriechel@roa.unimaas.nl
Author-Workplace-Name: University of Maastricht, Research Centre for Education and the Labour Market (ROA)
Title: Taxation and Technology Adoption: A Hotelling Approach
Abstract: Environmental regulation and competitiveness are issues that seem to be
	 at odds. However, the `Porter Hypothesis' states that firms can actually
	 gain in competitiveness if they are subject to stricter environmental
	 regulation. We show in a simple model the basic setting of the problem
	 to apply it then to a Hotelling framework. A non-adoption tax (adoption
	 subsidy) is shown to destroy a non-adoption equilibrium in a closed
	 economy model. We show that taxes not directly targeting the
	 non-adoption problem may fail to have an adoption incentive on the
	 firms. In an open economy model the Porter Hypothesis is shown to hold
	 if (i) non-adoption taxes are higher than adoption costs for one country
	 and lower for the other, and (ii) the returns of second adoption are
	 insufficient to cover the net adoption costs.  
Classification-JEL: H25, L25, Q2
Keywords: environmental regulations, industrial competitiveness, taxation
Series: UNU-MERIT Working Papers
Creation-Date: 2006
Number: 009
File-URL: http://www.merit.unu.edu/publications/wppdf/2006/wp2006-009.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2006009