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Policy‐Induced Technology Adoption: Evidence from the U.S. Lead Phasedown
Author(s) -
Kerr Suzi,
Newell Richard G.
Publication year - 2003
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/1467-6451.00203
Subject(s) - incentive , oil refinery , lead (geology) , public economics , industrial organization , economics , porter hypothesis , natural resource economics , panel data , petroleum industry , business , environmental policy , environmental economics , microeconomics , engineering , geomorphology , environmental engineering , econometrics , geology , waste management
Theory suggests that economic instruments, such as pollution taxes or tradable permits, can provide more efficient technology adoption incentives than conventional regulatory standards. We explore this issue for an important industry undergoing dramatic decreases in allowed pollution – the U.S. petroleum industry's phasedown of lead in gasoline. Using a duration model applied to a panel of refineries from 1971–1995, we find that the pattern of technology adoption is consistent with an economic response to market incentives, plant characteristics, and alternative policies. Importantly, evidence suggests that the tradable permit system used during the phasedown provided incentives for more efficient technology adoption decisions.