André Grimaud, Mauricio Bermudez Neubauer, and Luc Rougé, Politiques de R&D, Taxe Carbone et Paradoxe Vert, IDEI Working Paper, n. 806, November 2013.


We study an economy in which a final good is produced by two sectors. One uses a non-renewable and polluting resource, the other a renewable and clean resource. A specific type of research is associated to each sector. The public authorities levy a carbon tax and simultaneously subsidize both research sectors. We study the impact of such a policy scheme on the rate of resource extraction and emissions. The subsidy to research in the clean sector goes in the opposite direction of the effects of the carbon tax. If the tax creates a green paradox, the subsidy moderates it; if the tax slows down resource extraction, then the subsidy generates a green paradox


carbon tax; directed technical change; green paradox; R&D policy;

JEL codes

  • O32: Management of Technological Innovation and R&D
  • O41: One, Two, and Multisector Growth Models
  • Q20: General
  • Q32: Exhaustible Resources and Economic Development