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Green Innovation and Industrial Organization: A Guided Tour

In: Green Innovation and Industrial Organization

Author

Listed:
  • Ana Espinola-Arredondo
  • Felix Munoz-Garcia
  • Joanna Poyago-Theotoky

Abstract

We examine the literature on firms’ incentives to invest in abatement, also known as green R&D, and how these incentives are affected by environmental regulation. We identify two externalities: the tax-saving and the emission-reduction externality. The analysis highlights how the timing of regulation affects firms’ investment decisions, particularly the formation of Environmental Research Cartels (ERCs), as well as the role of spillover effects. We then investigate other extensions in this literature, such as considering that firms sequentially invest in abatement, that firms have asymmetric investment costs, alternative spillover effects, disruptive investments, and endogenous entry.

Suggested Citation

  • Ana Espinola-Arredondo & Felix Munoz-Garcia & Joanna Poyago-Theotoky, 2026. "Green Innovation and Industrial Organization: A Guided Tour," World Scientific Book Chapters, in: Joanna Poyago-Theotoky (ed.), Green Innovation and Industrial Organization, chapter 1, pages 1-33, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789819816033_0001
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    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • F18 - International Economics - - Trade - - - Trade and Environment

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