How to subsidise green technologies?

EEA Congress is the most important scientific event for economists in Europe. This year edition took place in Cologne (Germany) between 27th and 31st of August and was combined with the 71^st European Meeting of the Econometric Society.  The program included numerous contributed sessions, 14 invited sessions and 6 plenary lectures.

Our Institute was represented by Jan Witajewski-Baltvilks who presented research conducted within TRANSrisk project: „Green Growth and Taste Heterogeneity”. He showed that elasticity of substitution between clean and dirty goods increases with the number of varieties of clean good. Heterogeneity of taste delays phasing out of dirty industry. If the dispersion of consumers’ tastes is large, technological progress in clean industry can lead to environmental disaster (exponential growth of emissions).

The results from the theoretical model have policy implications – environmental policy which promotes development of clean industries should be supplemented with a policy which ensures the diversity of clean goods. For example a subsidy for R&D in clean transport should support a wide range of alternative technologies rather than selected few.

More results:

• presentation
• IBS Working Paper 07/2018: „Green Growth and Taste Heterogeneity”