Germany has committed itself to reducing its carbon emissions by 25 percent in 2005 as compared to 1990 emission levels. To achieve this goal, the government has recently launched an environmental tax reform which entails a continuous increase in energy taxes in conjunction with a...

The purpose of this paper is to introduce a modification of a standard four input production process where energy is used in an inefficient way due to partly unnecessary waste of energy. In this production process, R&D investment is an additional input in order to improve energy efficiency. It...