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Technology and Antitrust Policies in a Polluting Industry

  • Joel Sandonís
  • Petr Mariel

We compare different combinations of technology and antitrust policies from a social welfare point of view in a non-tournament model of cost reducing R&D with spillovers, for the case of a homogeneous goods duopoly, where production produces pollution as a by-product, firms face an exogenous emissions tax and can also invest in abatement technologies. We show that for sufficiently polluting industries facing a loose environmental policy, cooperative R&D is not always welfare improving; a policy of subsidizing cooperative R&D is always welfare improving; allowing for mergers may be socially desirable; not regulating the industry at all may be welfare superior to a policy consisting of forbidding market collusion and subsidizing cooperative R&D.

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Article provided by University of Economics, Prague in its journal Prague Economic Papers.

Volume (Year): 2004 (2004)
Issue (Month): 1 ()
Pages: 67-81

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Handle: RePEc:prg:jnlpep:v:2004:y:2004:i:1:id:232:p:67-81
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  1. Leahy, Dermot & Neary, J Peter, 1997. "Public Policy towards R&D in Oligopolistic Industries," American Economic Review, American Economic Association, vol. 87(4), pages 642-62, September.
  2. d'ASPREMONT, Claude & JACQUEMIN, Alexis, . "Cooperative and noncooperative R&D in duopoly with spillovers: Erratum," CORE Discussion Papers RP -892, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Farrell, Joseph & Shapiro, Carl, 1990. "Horizontal Mergers: An Equilibrium Analysis," American Economic Review, American Economic Association, vol. 80(1), pages 107-26, March.
  4. Levin, D., 1988. "Horizontal Mergers: The 50 Percent Bench-Mark," Papers 19, Houston - Department of Economics.
  5. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, vol. 82(5), pages 1293-306, December.
  6. Poyago-Theotoky, Joanna, 1995. "Equilibrium and Optimal Size of a Research Joint Venture in an Oligopoly with Spillovers," Journal of Industrial Economics, Wiley Blackwell, vol. 43(2), pages 209-26, June.
  7. McAfee, R Preston & Williams, Michael A, 1992. "Horizontal Mergers and Antitrust Policy," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 181-87, June.
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