The optimal timing of manufacturers adopting pollution abatement technology under tradable emissions permits

To protect environment need manufacturers to improve pollution abatement technology, and technology adoption is the effective means for achieving the purpose. Using real option theory and dynamic program method, this paper focuses on the research of the optimal timing of firms to adopt new pollution abatement technology under tradable emissions permits. It is assumed that in the process of new pollution abatement adoption, the manufacturers face two kinds of uncertain factors that are the speed new technology appearing and new technology innovation level. The results show that the optimal adopting timing of firms adopt new pollution abatement technology interrelate with many factors, this factors include new technology appearing speed, technology innovation level, discount rate, initial pollution abatement technology, efficiency of production technology, emissions permits price, product price, and output elasticity, etc. And it is showed by simulation model that the faster new technology appearing the earlier manufacturers adopt new technology and the higher the new technology improve the efficiency the later manufacturers adopt new technology. On other variables, we also obtain the corresponding simulation results.