Considering how many firms can meet pollutant standards can spur green tech development
Wednesday, May 6, 2020 - 03:10
in Mathematics & Economics
When a government agency considers tightening a standard on a pollutant, it often considers the proportion of firms that can meet the new standard, because a higher proportion suggests a more feasible standard. A new study developed a model of regulation in which the probability of a stricter standard being enacted increased with the proportion of firms in an industry that could meet the standard. The study found that regulations that consider the proportion of firms that can meet the new standard can motivate the development of a new green technology more effectively than regulations that do not consider this factor.