RES-ECON 162 Lecture Notes - Lecture 11: Clean Power Plan, Moodle, Cost
30 Mar 2017
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Res econ - 3/30/17 emissions standards and incentives for innovation: instead of setting a policy that targets the efficient level e*, a tighter standard could be set in the first place. Because technological change is so important for making progress on improving environmental performance, a regulator may wish to increase the incentive to adopt new technologies by imposing a stricter-than- efficient standard in anticipation of technological innovation. In the graph below the regulator sets the emissions standard at e** before the firm adopts the new technology. Note that the standard is inefficiently strict before the firms adopts the new technology, but is efficient after. *this all basically means set tighter standards so that the firm has incentive for advancing their technology used to reduce their mac and increase md* Trump rolls back the clean power plan- supporting fossil fuels as usual. Cpp- puts us into compliance with the paris agreement.
