nep-ind New Economics Papers
on Industrial Organization
Issue of 2015‒12‒12
one paper chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Cournot Competition and "Green" Innovation: An Inverted-U Relationship By Luca Lambertini; Joanna Poyago-Theotoky; Alessandro Tampieri

  1. By: Luca Lambertini (University of Bologna, Italy); Joanna Poyago-Theotoky (La Trobe University, Australia); Alessandro Tampieri (University of Luxembourg, Luxembourg)
    Abstract: We examine the relationship between competition and innovation in an industry where production is polluting and R&D aims to reduce emissions ("green" innovation). We present an n-firm oligopoly where firms compete in quantities and decide their investment in "green" R&D. When environmental taxation is exogenous, aggregate R&D investment always increases with the number of firms in the industry. Next we analyse the case where the emission tax is set endogenously by a regulator (committed or time-consistent) with the aim to maximise social welfare. We show that an inverted-U relationship exists between aggregate R&D and industry size under reasonable conditions, and is driven by the presence of R&D spillovers.
    Keywords: "Green" R&D, R&D Spillovers, Emission Taxation, Time-Consistent Emission Tax, Pre-Commited Emission Tax
    JEL: Q55 Q56 O30 L13
    Date: 2015–08
    URL: http://d.repec.org/n?u=RePEc:fem:femwpa:2015.73&r=ind

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