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Do emission subsidies reduce emission? In the context of environmental R&D organization

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  • Ouchida, Yasunori
  • Goto, Daisaku

Abstract

This paper, which reexamines the Poyago-Theotoky model, 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 scenario become less 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.

Suggested Citation

  • Ouchida, Yasunori & Goto, Daisaku, 2014. "Do emission subsidies reduce emission? In the context of environmental R&D organization," Economic Modelling, Elsevier, vol. 36(C), pages 511-516.
  • Handle: RePEc:eee:ecmode:v:36:y:2014:i:c:p:511-516
    DOI: 10.1016/j.econmod.2013.10.009
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Arestis, Philip & Gonzalez-Martinez, Ana Rosa, 2016. "Revisiting the accelerator principle in a world of uncertainty: Some empirical evidence," Economic Modelling, Elsevier, vol. 56(C), pages 35-42.
    2. Chen, Anping & Groenewold, Nicolaas, 2015. "Emission reduction policy: A regional economic analysis for China," Economic Modelling, Elsevier, vol. 51(C), pages 136-152.
    3. Takashima, Nobuyuki, 2017. "International environmental agreements with ancillary benefits: Repeated games analysis," Economic Modelling, Elsevier, vol. 61(C), pages 312-320.
    4. Ouchida, Yasunori & Goto, Daisaku, 2016. "Environmental research joint ventures and time-consistent emission tax: Endogenous choice of R&D formation," Economic Modelling, Elsevier, vol. 55(C), pages 179-188.
    5. repec:gam:jeners:v:10:y:2017:i:12:p:2026-:d:121239 is not listed on IDEAS
    6. Yasunori Ouchida & Daisaku Goto, 2014. "Cournot duopoly and environmental R&D under regulator’s precommitment to an emissions tax," IDEC DP2 Series 4-3, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
    7. Yasunori Ouchida & Daisaku Goto, 2014. "Environmental Research Joint Ventures and Time-Consistent Emission Tax," Working Papers 2014.35, Fondazione Eni Enrico Mattei.
    8. Naoto Aoyama & Emilson C.D. Silva, 2017. "Asymmetric Innovation Agreements under Environmental Regulation," CESifo Working Paper Series 6782, CESifo Group Munich.
    9. Fan, Jin & He, Haonan & Wu, Yanrui, 2016. "Personal carbon trading and subsidies for hybrid electric vehicles," Economic Modelling, Elsevier, vol. 59(C), pages 164-173.
    10. repec:eee:ecmode:v:64:y:2017:i:c:p:601-609 is not listed on IDEAS
    11. Shoji Haruna & Rajeev K. Goel, 2018. "Optimal Pollution Control in a Mixed Oligopoly with Research Spillovers," CESifo Working Paper Series 6909, CESifo Group Munich.

    More about this item

    Keywords

    Emission subsidy; Emission tax; Emission reduction; Environmental R&D; Cournot duopoly;

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; 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

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