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Environmental Regulations in Private and Mixed Duopolies: Emission Taxes versus Green R&D Subsidies

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  • Lee, Sang-Ho
  • Park, Chul-Hi

Abstract

In the presence of R&D spillovers, we compare environmental regulations between an emission taxes and green R&D subsidies in private and mixed duopoly markets. We show that the green R&D subsidy is better (worse) than the emission tax when the green R&D cost is low (high) irrespective of the R&D spillovers, whereas the existence of a public firm encourages the government to adopt the subsidy policy. We then show that the optimal policy choice depends on the level of the R&D cost and the degree of R&D spillovers. In particular, when the R&D cost is high and the spillover rate is (not) weak, the government should choose the emission tax and (not) privatize the public firm. However, when the R&D cost is low, such a privatization policy is not desirable to society irrespective of the R&D spillovers.

Suggested Citation

  • Lee, Sang-Ho & Park, Chul-Hi, 2020. "Environmental Regulations in Private and Mixed Duopolies: Emission Taxes versus Green R&D Subsidies," MPRA Paper 98833, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:98833
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    References listed on IDEAS

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    2. Akira Yakita & Donglin Zhang, 2022. "Environmental awareness, environmental R&D spillovers, and privatization in a mixed duopoly," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 24(3), pages 447-458, July.
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    More about this item

    Keywords

    emission tax; green R&D subsidy; R&D spillovers; privatization policy;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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