Incentives for Green R&D in a Dirty Industry under Price Competition
AbstractIn 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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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 29 (2009)
Issue (Month): 3 ()
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Abatement tax; emission caps; environmental policy; green R&D; price competition.;
Find related papers by JEL classification:
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
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