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Optimal Timing and Scale For Adopting Green Technology
This paper considers the decisions of a firm concerning the timing of installing green technology in production. We find that regulatory goals for a high green use in production help accelerate investment in green technologies. However, firms facing more volatile demand may delay investment in green technologies. When green technology is inefficient, small technological leaps postpone their adoption; however, when they become competitive in terms of efficiency, small additional improvements in efficiency accelerate their deployment.