Design, Trading, and Innovation

Research output: Chapter in Book/Entry/PoemChapter

5 Scopus citations


This chapter makes two theoretical claims and two empirical claims. The first theoretical claim is that emissions trading does a poorer job, in theory, of encouraging expensive innovation than traditional regulation. It also argues that expensive innovation has special value that justifies the expense in some important cases. The second theoretical claim is that emissions trading may perform worse than traditional regulation in encouraging inexpensive innovation as well, at least in theory. The first empirical claim is that both emissions trading and traditional regulation have sometimes encouraged innovation and sometimes failed to do so. The second claim is that there is no convincing empirical evidence that trading fosters innovation better than a comparably designed traditional regulation.

Original languageEnglish (US)
Title of host publicationMoving to Markets in Environmental Regulation
Subtitle of host publicationLessons from Twenty Years of Experience
PublisherOxford University Press
ISBN (Electronic)9780199783694
ISBN (Print)0195189655, 9780195189650
StatePublished - Oct 1 2006


  • Emissions trading
  • Environmental policy
  • Innovation
  • Traditional regulation

ASJC Scopus subject areas

  • General Economics, Econometrics and Finance


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