TY  - CHAP
AB  - In this chapter we present a continuous time model with reversible abatement capital in order to analyze the effects of environmental policies on the value of the firm and investment decisions. We show that the effects depend on what sort of future policy are implemented. We focus on investment effects of changes in corrective taxes to control the use of polluting inputs, and subsidies to promote abatement investment. We show that (1) while taxes have a depressive effect on capital accumulation, subsidies boost investment; (2) the impact of these policies on the value of the firm is ambiguous. This latter result has important empirical implications insofar as investment are based on the average value of the firm rather than the (unobservable) marginal value.
VL  - 11
SN  - 978-1-78052-397-2, 978-1-78052-396-5/1574-8715
DO  - 10.1108/S1574-8715(2011)0000011025
UR  - https://doi.org/10.1108/S1574-8715(2011)0000011025
AU  - Saltari Enrico
AU  - Travaglini Giuseppe
ED  - Olivier de La Grandville
PY  - 2011
Y1  - 2011/01/01
TI  - Chapter 20 Optimal Abatement Investment and Environmental Policies Under Pollution Uncertainty
T2  - Economic Growth and Development
T3  - Frontiers of Economics and Globalization
PB  - Emerald Group Publishing Limited
SP  - 527
EP  - 541
Y2  - 2024/09/21
ER  -