When compared to the planner's assessment, the polluter overestimates benefits from R&D
investment because the privately optimal level of abatement under the newtechnology is xDSL
2 = :598b ˜x. In contrast, the plannerwould abate up
to x2⁎=.742, which is greater than ˜x so that the planner incorporates the
consequence of the new technology with regard to the level of marginal
abatement costs at abatement levels x∈(.625,.742].