In static models of the adoption of new technologies, a firm generally adopts complementary technologies simultaneously. This paper presents a dynamic model in which, taking into account the potential time paths of costs and benefits, it may be more prudent to adopt complementary technologies...

We compare a carbon tax and a cap and trade mechanism in their propensity to induce carbon-reducing technological adoption, when investments are undertaken under uncertainty. In our setting, risk-neutral firms affect the variance and the correlation of the shocks they are exposed to through...