| 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 |