Transboundary Pollution, R&D Spillovers, Absorptive Capacity and International Trade
AbstractIn this paper, we study the effects of absorptive capacity and R&D spillovers on cross -border pollution in a game played by two regulator-firm hierarchies. By means of a tax per-unit of pollution, a subsidy per- unit of original research and a subsidy per-unit of absorptive research, the regulators can reach the first -best outcome. We show that, in addition to free R&D spillovers and absorptive research, competition of firms on the common market help non -cooperating countries to better internalize transboundary pollution. More importantly, opening borders increase the per -unitemission- tax and decrease the per-unit original research subsidy. Thus, when the investment-costparameters are sufficiently high, the international trade increases the original research, production.Consequently, the emission ratio is lower.
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Bibliographic InfoArticle provided by Econjournals in its journal International Journal of Economics and Financial Issues.
Volume (Year): 4 (2014)
Issue (Month): 3 ()
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Web page: http://www.econjournals.com
Transboundary pollution ; R&D spillovers; absorptive capacity; international trade;
Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
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