Paper Title
Instrument Choice for Environmental Technology Licensing: Standards Vs. Tradeable Permits
Abstract
In this paper, we examine the relationship between the choice of regulatory instruments and environmental
technology licensing. We analyze and compare firms’ licensing behavior under two commonly used regulatory instruments:
standards and tradeable permits. Given that the instruments emit the same amount of emissions, we find that in the intralicensing
scheme, the standards instrument is unambiguously superior to the emission-trading in providing more incentives
for the licensor to participate in the licensing transaction. This implies that to better promote the spillover of pollution
abatement technology, the standards instrument may be more appropriate.