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Dynamic optimal control of firms' green innovation investment and pricing strategies with environmental awareness and emission tax

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  • Dongdong Li

Abstract

This paper develops a dynamic optimal control model to investigate the effects of consumer environmental awareness and emission tax on firms' green innovation investment and pricing strategies. Our main results show the following: (i) when both consumer environmental awareness and emission tax are present, the firm's reaction to environmental awareness may be non‐monotone, although a higher emission tax always yields higher green innovation investment and price; (ii) competition in an environmentally sensitive market increases the investment of the firm's green innovation; (iii) raising emission tax may be a better policy choice than promoting consumer environmental awareness when the market size is small.

Suggested Citation

  • Dongdong Li, 2022. "Dynamic optimal control of firms' green innovation investment and pricing strategies with environmental awareness and emission tax," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(4), pages 920-932, June.
    • Handle: RePEc:wly:mgtdec:v:43:y:2022:i:4:p:920-932
    DOI: 10.1002/mde.3427
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    3. Lin Li & Wenjing Che, 2026. "Internal logic and driving path of enterprise green innovation performance improvement under TOE framework: based on linkage effect analysis of fsQCA and NCA," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 28(1), pages 915-936, January.
    4. Sha Lou & Chunqiong Yao & Dehua Zhang, 2025. "How to promote green innovation of high-pollution firms? A fuzzy-set QCA approach based on the TOE framework," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(2), pages 4911-4935, February.
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    6. Donis, Silvia & Gómez, Jaime & Salazar, Idana, 2023. "Economic complexity, property rights and the judicial system as drivers of eco-innovations: An analysis of OECD countries," Technovation, Elsevier, vol. 128(C).

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