Environmental policies with the excess burden of public funds and privatisation.

This study investigates the interaction of environmental policies with the shadow cost of public funds and the efficiency of green research and development (R&D), while considering the presence of a public firm. In the policy combination of emission taxes and green R&D subsidies, we find that it has an implementable region where the shadow cost is neither high nor low, but the green R&D efficiency is high. We also demonstrate that the privatisation of public firms decreases the rates of both emission taxes and green R&D subsidies under a single policy regime. This increases (decreases) the implementable region of the policy combination of the emission tax (green subsidy) and is only implementable in the presence of a public firm. Finally, privatisation is shown to increase welfare when the shadow cost is lowest and green R&D is less efficient. These findings highlight that public ownership substitutes for environmental policies, while the shadow cost of public funds and the green R&D efficiency are critical when privatising public firms. [ABSTRACT FROM AUTHOR]

Copyright of Australian Economic Papers is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)