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Environmental R&D Risk Choices and Environmental Policies in a Mixed Duopoly

Author

Listed:
  • Weiwei Zhang
  • Hui Li
  • Dongdong Li

Abstract

This paper investigates how environmental policies—emission tax and emission standard—affect the optimal environmental R&D (ER&D) risk choices of firms in a mixed market. The results show that for the private firm, ER&D risk is lower (higher) under the emission tax than under the emission standard when consumer environmental awareness is low (high). For the public firm, ER&D risk is always higher under the emission tax than under the emission standard. We also show that a privatization policy always decreases the ER&D risk of the public firm but is likely to increase the ER&D risk of the private firm. Finally, we find that the private firm faces considerable welfare risk when consumer environmental awareness is high under the emission tax. However, the private firm's incentive for ER&D risk is always lower than the social incentive under the emission standard.

Suggested Citation

  • Weiwei Zhang & Hui Li & Dongdong Li, 2025. "Environmental R&D Risk Choices and Environmental Policies in a Mixed Duopoly," American Journal of Economics and Sociology, Wiley Blackwell, vol. 84(5), pages 671-682, November.
    • Handle: RePEc:bla:ajecsc:v:84:y:2025:i:5:p:671-682
    DOI: 10.1111/ajes.12624
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    References listed on IDEAS

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    3. Chang Yang-Ming & Sellak Manaf, 2023. "Environmental Policy in Vertical Markets with Downstream Pollution: Taxes Versus Standards," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 23(4), pages 897-923, October.
    4. Mingqing Xing, 2019. "Partial Privatization Policy and the R&D Risk Choice in a Mixed Duopoly Market," Manchester School, University of Manchester, vol. 87(1), pages 60-80, January.
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    7. Moner-Colonques Rafael & Rubio Santiago J., 2016. "The Strategic Use of Innovation to Influence Environmental Policy: Taxes versus Standards," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(2), pages 973-1000, April.
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