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Environmental impact of technology policy: R&D Subsidies versus R&D cooperation

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  • Petrakis, Emmanuel
  • Poyago-Theotoky, Joanna

Abstract

In this paper we study a neglected aspect ofteclmology policy, namely the adverse impact it might have on the envirol1Il1ent through increased production when R&D expenditure leads to cost reduction. Although teclmology policy measures that encourage finns to reduce their production costs would usually reduce energy inputs and therefore generate less pollution per unit of output production, we explore here the case where with reorganisation of production output gene rally increases. So even if per unit of production pollution is less, total pollution generated by the increased production induced by the innovative efforts of films increases. In this context it is therefore necessary to address the issue of tying-in teclmology and environmental policy, which is the issue we raise in this paper. We show that, irrespective of whether teclmology policy takes the fonn of R&D subsidies or R&D cooperation, R&D would gene rally lead to increased pollution and thus have a negative impact on the environment. Policies that might be optimal in the absence of concem for the enviroJUllent ceas e to be so. We claim that not only is a comparison between policy instruments more delicate but the optimal R&D subsidy might be negative. FinalIy, we propose and evaluate a speeific poliey in the form of a targeted subsidy tied-in to abatement activities and show that it is welfare improving.

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Bibliographic Info

Paper provided by Universidad Carlos III de Madrid in its series Open Access publications from Universidad Carlos III de Madrid with number info:hdl:10016/6072.

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Handle: RePEc:ner:carlos:info:hdl:10016/6072

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Keywords: Technology policy; Process innovation; Pollution; R&D cooperation; R&D subsides;

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  1. D Leahy & J.P. Neary, 1995. "Public Policy Towards R&D in Oligopolistic Industries," CEP Discussion Papers dp0270, Centre for Economic Performance, LSE.
  2. Beath, John & Poyago-Theotoky, Joanna & Ulph, David, 1998. "Organization Design and Information-Sharing in a Research Joint Venture with Spillovers," Bulletin of Economic Research, Wiley Blackwell, vol. 50(1), pages 47-59, January.
  3. Ulph, Alistair, 1996. "Environmental Policy and International Trade when Governments and Producers Act Strategically," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 265-281, May.
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Cited by:
  1. Yannis Katsoulacos & Alistair Ulph & David Ulph, 1999. "The Effects of Environmental Policy on the Performance of Environmental RIVs," NBER Working Papers 7301, National Bureau of Economic Research, Inc.
  2. Yannis Katsoulacos & Alistair Ulph & David Ulph, 2001. "The Effects of Environmental Policy on the Performance of Environmental Research Joint Ventures," NBER Chapters, in: Behavioral and Distributional Effects of Environmental Policy, pages 309-346 National Bureau of Economic Research, Inc.
  3. Andrew McKay & Oliver Morrissey & Charlotte Vaillant, . "Aggregate Export and Food Crop Supply Response in Tanzania," Discussion Papers 98/4, University of Nottingham, CREDIT.

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