Green innovation is essential for climate change mitigation, but not all innovative projects deliver equal social value …. We consider innovator heterogeneity in a model where the policy maker cannot observe innovation quality and directly … subsidize the socially most valuable green innovations. We find that carbon pricing works as an innovation screening device …

Environmental regulations have consistently been found to spur innovation in "clean" technologies, with one significant … effect on innovation. Several explanations have been offered, including secondary market failures and a lack of polluter …, contrary to past experience, encouraged innovation rather than adoption. I discuss how these contrasting findings can be …