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The article shows that before trading began for these CTPs, analysts overestimated the value of allowances in a pattern suggestive of the frequent a priori overestimation of the compliance costs of regulation. When lower-than-expected allowance prices were observed, in part because of the unexpected range of abatement approaches used in the lead-up to trading, emissions sources chose to bank allowances in significant numbers and reassess abatement approaches going forward. In addition, commercially oriented inventive activity declined for emissions-reducing technologies with a wide range of costs and technical characteristics, dropping from peaks before the establishment of CTPs to nadirs a few years into trading. This finding is consistent with innovators deciding during trading that their research and development investments should be reduced, based on assessments of future market conditions under the relevant CTPs. The article concludes with a discussion of the results and their implications for innovation and climate policy.<\/jats:p>","DOI":"10.1073\/pnas.1113462109","type":"journal-article","created":{"date-parts":[[2012,3,13]],"date-time":"2012-03-13T01:00:12Z","timestamp":1331600412000},"page":"4804-4809","update-policy":"https:\/\/doi.org\/10.1073\/pnas.cm10313","source":"Crossref","is-referenced-by-count":79,"title":["Innovation under cap-and-trade programs"],"prefix":"10.1073","volume":"109","author":[{"given":"Margaret R.","family":"Taylor","sequence":"first","affiliation":[{"name":"Richard and Rhoda Goldman School of Public Policy, University of California, Berkeley, CA 94720-7320"}],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"341","published-online":{"date-parts":[[2012,3,12]]},"reference":[{"key":"e_1_3_3_1_2","doi-asserted-by":"publisher","DOI":"10.1016\/j.eneco.2008.06.004"},{"key":"e_1_3_3_2_2","doi-asserted-by":"publisher","DOI":"10.1016\/j.ecolecon.2010.09.032"},{"key":"e_1_3_3_3_2","doi-asserted-by":"publisher","DOI":"10.1016\/S0095-0696(03)00002-0"},{"key":"e_1_3_3_4_2","doi-asserted-by":"publisher","DOI":"10.1080\/15140326.2002.12040581"},{"key":"e_1_3_3_5_2","doi-asserted-by":"publisher","DOI":"10.1023\/A:1008079223033"},{"key":"e_1_3_3_6_2","doi-asserted-by":"publisher","DOI":"10.1016\/j.eist.2011.12.002"},{"key":"e_1_3_3_7_2","doi-asserted-by":"publisher","DOI":"10.1023\/A:1015519401088"},{"key":"e_1_3_3_8_2","volume-title":"Emissions Trading: Principles and Practice","author":"Tietenberg TH","year":"2006","unstructured":"TH Tietenberg Emissions Trading: Principles and Practice (Resources for the Future, Washington, D.C., 2006)."},{"key":"e_1_3_3_9_2","doi-asserted-by":"publisher","DOI":"10.1016\/j.ecolecon.2011.09.014"},{"key":"e_1_3_3_10_2","doi-asserted-by":"publisher","DOI":"10.1016\/j.ecolecon.2008.07.004"},{"key":"e_1_3_3_11_2","first-page":"63","volume-title":"in Innovation and the Environment","author":"Burtraw D","year":"2000","unstructured":"D Burtraw in Innovation and the Environment, ed G Heaton (Organisation for Economic Co-operation and Development, Paris), pp. 63\u201384 (2000)."},{"key":"e_1_3_3_12_2","doi-asserted-by":"crossref","first-page":"3","DOI":"10.1007\/978-0-387-73653-2_1","volume-title":"in Emissions Trading: Institutional Design, Decision Making, and Corporate Strategies","author":"Kruger J","year":"2008","unstructured":"J Kruger in Emissions Trading: Institutional Design, Decision Making, and Corporate Strategies, eds R Antes, B Hansjurgens, P Letmathe (Springer, New York), pp. 3\u201320 (2008)."},{"key":"e_1_3_3_13_2","first-page":"1059","volume-title":"Handbook of Industrial Organization","author":"Cohen W","year":"1989","unstructured":"W Cohen, J Levin Handbook of Industrial Organization, eds R Schmalensee, RD Willig (Elsevier, Amsterdam) Vol 2, 1059\u20131107 (1989)."},{"key":"e_1_3_3_14_2","volume-title":"Diffusion of Innovations","author":"Rogers EM","year":"1995","unstructured":"EM Rogers Diffusion of Innovations (Free Press, 4th Ed, NY, 1995).","edition":"4"},{"key":"e_1_3_3_15_2","doi-asserted-by":"publisher","DOI":"10.1002\/(SICI)1520-6688(200021)19:2<297::AID-PAM7>3.0.CO;2-X"},{"key":"e_1_3_3_16_2","doi-asserted-by":"publisher","DOI":"10.1016\/j.enpol.2008.09.087"},{"key":"e_1_3_3_17_2","first-page":"309","article-title":"How environmental laws work: An analysis of the utility sector's response to regulation of nitrogen oxides and sulfur dioxide under the Clean Air Act","volume":"14","author":"Swift B","year":"2001","unstructured":"B Swift, How environmental laws work: An analysis of the utility sector's response to regulation of nitrogen oxides and sulfur dioxide under the Clean Air Act. 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