The organization of R&D and environmental policy: So does emission subsidy reduce emissions?
AbstractThis paper reexamines the Poyago-Theotoky model and provides additional investigation that was conducted under a corrected environmental damage parameter. As new findings, we obtain the following. First, social welfare under a time-consistent emission tax (emission subsidy) policy is always welfare-enhancing rather than the case of laissez-faire. Second, if the environmental damage parameter is sufficiently small, then the equilibrium emission tax rate is invariably negative. It is therefore an emission subsidy. Moreover, total emissions under the emission subsidy become smaller than those under laissez-faire if the damage parameter is sufficiently small, and if the R&D cost is low. However, total emissions under the emission subsidy become greater than those under laissez-faire if the damage parameter is sufficiently small, and if the R&D cost is high.
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Bibliographic InfoPaper provided by Hiroshima University, Graduate School for International Development and Cooperation (IDEC) in its series IDEC DP2 Series with number 2-13.
Length: 12 pages
Date of creation: Sep 2012
Date of revision:
Emission subsidy; Emission tax; Emission reduction; Environmental R&D; Cournot duopoly;
Find related papers by JEL classification:
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-16 (All new papers)
- NEP-ENE-2012-09-16 (Energy Economics)
- NEP-ENV-2012-09-16 (Environmental Economics)
- NEP-INO-2012-09-16 (Innovation)
- NEP-RES-2012-09-16 (Resource Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Petrakis, Emmanuel & Xepapadeas, Anastasios, 2003. "Location decisions of a polluting firm and the time consistency of environmental policy," Resource and Energy Economics, Elsevier, vol. 25(2), pages 197-214, May.
- Yasunori Ouchida & Daisaku Goto, 2011.
"A Note on Environmental R&D under Time-Consistent Emission Tax,"
International Journal of Business and Economics,
College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan, vol. 10(3), pages 257-260, December.
- Yasunori Ouchida & Daisaku Goto, 2011. "A note on environmental R&D under time-consistent emission tax," IDEC DP2 Series 1-6, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
- Poyago-Theotoky, J.A., 2007. "The organization of R&D and environmental policy," Journal of Economic Behavior & Organization, Elsevier, vol. 62(1), pages 63-75, January.
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