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Inducing Innovation in the Environmental Technology of Oligopolistic Firms

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Author Info
Innes, Robert
Bial, Joseph J

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Abstract

This paper characterizes environmental regulations which induce polluting Bertrand competitors to invest efficiently in environmental R&D. Post-innovation benefits to raising rivals' costs provide firms with incentives to innovate. Although optimal behavior cannot be elicited with pollution taxes alone, an optimum can be achieved by combining emission taxes with environmental performance standards that are higher for firms which reveal superior environmental technologies. Faced with this policy, successful innovators voluntarily reveal their technological discovery to the government, despite the apparent regulatory penalty that results. Implications for automotive fuel regulation are discussed. Copyright 2002 by Blackwell Publishing Ltd

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Publisher Info
Article provided by Blackwell Publishing in its journal Journal of Industrial Economics.

Volume (Year): 50 (2002)
Issue (Month): 3 (September)
Pages: 265-87
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Handle: RePEc:bla:jindec:v:50:y:2002:i:3:p:265-87

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  1. Maia David & Bernard Sinclair-Desgagné, 2004. "Environmental Regulation and the Eco-industry," CIRANO Working Papers 2004s-42, CIRANO. [Downloadable!]
    Other versions:
  2. Bahar Erbas & David Abler, 2008. "Environmental Policy with Endogenous Technology from a Game Theoretic Perspective: The Case of the US Pulp and Paper Industry," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(3), pages 425-444, July. [Downloadable!] (restricted)
  3. Sam, Abdoul G. & Innes, Robert & Khanna, Madhu, 2006. "How do Voluntary Pollution Reduction Programs (VPRs) Work? An Empirical Study of Links between VPRs, Environmental Management, and Environmental Performance," 2006 Annual meeting, July 23-26, Long Beach, CA 21192, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  4. Nelissen, Dagmar & Requate, Till, 2004. "Pollution-Reducing and Resource-Saving Technological Progress," Economics Working Papers 2004,07, Christian-Albrechts-University of Kiel, Department of Economics. [Downloadable!]
  5. Anthony Heyes, 2009. "Is environmental regulation bad for competition? A survey," Journal of Regulatory Economics, Springer, vol. 36(1), pages 1-28, August. [Downloadable!] (restricted)
  6. Daniel Phaneuf & Till Requate, 2002. "Incentives for Investment in Advanced Pollution Abatement Technology in Emission Permit Markets with Banking," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(3), pages 369-390, July. [Downloadable!] (restricted)
  7. Thomas P. Lyon & John W. Maxwell, 2007. "Corporate Social Responsibility and the Environment: A Theoretical Perspective," Working Papers 2007-16, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy. [Downloadable!]
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  8. Stephen Pavelin & Lynda Porter, 2008. "The Corporate Social Performance Content of Innovation in the U.K," Journal of Business Ethics, Springer, vol. 80(4), pages 711-725, July. [Downloadable!] (restricted)
  9. Marcel Boyer & Philippe Mahenc & Michel Moreaux, 2007. "Environmental Protection, Consumer Awareness, Product Characteristics, and Market Power," CIRANO Working Papers 2007s-05, CIRANO. [Downloadable!]
  10. Innes, Robert & Sam, Abdoul, 2003. "Voluntary Pollution Abatement: Testing Alternative Theories," 2003 Annual meeting, July 27-30, Montreal, Canada 21945, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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