| This dissertation develops three models that analyze the link between environmental policy and the adoption of technology.; The first model shows that, under some circumstances, an environmental regulation can benefit affected firms by inducing them jointly to adopt a technology. The model considers a scenario in which production creates pollution, and concurrently, the cost of using a particular technology declines as the number of users increases. Consequently, a widely used but dirty technology may dominate, because any individual firm faces a high cost of adopting a cleaner alternative. If government induces all firms to switch to a newer and cleaner technology, then the cost of that technology is reduced. Therefore, a policy designed to alleviate pollution can also benefit the affected industry by lowering costs. |
