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Incentives for Green R&D in a Dirty Industry under Price Competition

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  • Indrani Roy chowdhury

    ()
    (Jamia Millia islamia)

Abstract

In an oligopolistic framework with price competition, we examine the effect of abatement taxes, as well as emission caps on the incentives for adopting a green technology. We identify two new strategic effects, namely the relative efficiency effect, and the competition softening effect, that affect the incentive for green R&D. Under an abatement tax, R&D incentives increase whenever the new technology is non-drastic, and the demand function is either approximately linear, or not too elastic. Another sufficient condition is that the market size be sufficiently large. With emission caps, the result depends on how green the new technology is.

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File URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I3-P72.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 29 (2009)
Issue (Month): 3 ()
Pages: 2265-2274

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Handle: RePEc:ebl:ecbull:eb-09-00425

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Related research

Keywords: Abatement tax; emission caps; environmental policy; green R&D; price competition.;

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References

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  1. Xepapadeas, A. & Zeeuw, A.J. de, 1998. "Environmental Policy and Competitiveness: The Porter Hypothesis and the Composition of Capital," Discussion Paper 1998-38, Tilburg University, Center for Economic Research.
  2. Tasnadi, Attila, 1999. "Existence of pure strategy Nash equilibrium in Bertrand-Edgeworth oligopolies," Economics Letters, Elsevier, vol. 63(2), pages 201-206, May.
  3. Indrani, Roy Chowdhury, 2006. "Re-visiting the Porter Hypothesis," MPRA Paper 7899, University Library of Munich, Germany.
  4. Karen Palmer & Wallace E. Oates & Paul R. Portney, 1995. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 119-132, Fall.
  5. Simpson, R. David & Bradford, Robert III, 1996. "Taxing Variable Cost: Environmental Regulation as Industrial Policy," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 282-300, May.
  6. Mohr, Robert D., 2002. "Technical Change, External Economies, and the Porter Hypothesis," Journal of Environmental Economics and Management, Elsevier, vol. 43(1), pages 158-168, January.
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Cited by:
  1. Roy Chowdhury, Prabal, 2010. "The Porter Hypothesis and Hyperbolic Discounting," MPRA Paper 23647, University Library of Munich, Germany.
  2. Indrani Roy Chowdhury & Sandwip K. Das, 2011. "Environmental regulation, green R&D and the Porter hypothesis," Indian Growth and Development Review, Emerald Group Publishing, vol. 4(2), pages 142-152, September.

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