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On Green R&D Organisation and Environmental Regulation: Cooperation vs. Non-Cooperation

In: Green Innovation and Industrial Organization

Author

Listed:
  • Marie-Laure Cabon-Dhersin
  • Natacha Raffin

Abstract

In this chapter, we compare taxes and standards as environmental policies in a duopoly model where production generates pollution. To lower their emissions, firms invest in upstream green R&D (in the presence of technological spillovers) either cooperatively or non-cooperatively, and then compete in quantities. The outcomes of the two policies are identical when firms do not cooperate in R&D; R&D cooperation under taxes always improves social welfare by increasing both abatement efforts and consumer surplus. Conversely, R&D cooperation under standards pushes firms to reduce production, which is detrimental to consumers though better for the environment and more profitable for firms.

Suggested Citation

  • Marie-Laure Cabon-Dhersin & Natacha Raffin, 2026. "On Green R&D Organisation and Environmental Regulation: Cooperation vs. Non-Cooperation," World Scientific Book Chapters, in: Joanna Poyago-Theotoky (ed.), Green Innovation and Industrial Organization, chapter 7, pages 165-189, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789819816033_0007
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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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