| dc.description.abstract | Recent contributions in the environmental literature seem to suggest that incentives to environmental research is lower than incentives to ordinary research, arguing in favor for additional support for environmental R\&D. Their arguments are based on the conjecture of the commitment problem. Since the government influences incentives implicitly through their environmental policy, they may be tempted to expropriate rents from the successful innovation with strategic taxation. In this thesis I analyze whether the incentives to environmental R\&D is systematically lower, due to both the appropriability problem and the commitment problem. Secondly I investigate how an inducement prize to environmental innovations can remedy these market failures. My conclusion on the standard commitment problem confirm the results in Greaker and Hoel (2011) where a ranking of incentives is arbitrary, depending on parameter values. This gives no reason to frequently use of innovation prizes to environmental R\&D. I therefore expand the analysis and introduce a political disturbance, investigating whether this gives a specific ranking. It turns out that intermediate disturbance gives a distinct underprovision of environmental R\&D. For this special case innovation prizes will restore the optimal level of incentives. The thesis contains of a historical introduction and a discussion of innovation prizes as an inducement mechanism for environmental R\&D. | en_US |