Environmental Impact of Technology Policy: R&D Subsidies Versus R&D Cooperation
In this paper we study a neglected aspect ofteclmology policy, namely the adverse impact it might have on the envirol1Il1ent through increased production when R&D expenditure leads to cost reduction. Although teclmology policy measures that encourage finns to reduce their production costs would usually reduce energy inputs and therefore generate less pollution per unit of output production, we explore here the case where with reorganisation of production output gene rally increases. So even if per unit of production pollution is less, total pollution generated by the increased production induced by the innovative efforts of films increases. In this context it is therefore necessary to address the issue of tying-in teclmology and environmental policy, which is the issue we raise in this paper. We show that, irrespective of whether teclmology policy takes the fonn of R&D subsidies or R&D cooperation, R&D would gene rally lead to increased pollution and thus have a negative impact on the environment. Policies that might be optimal in the absence of concem for the enviroJUllent ceas e to be so. We claim that not only is a comparison between policy instruments more delicate but the optimal R&D subsidy might be negative. FinalIy, we propose and evaluate a speeific poliey in the form of a targeted subsidy tied-in to abatement activities and show that it is welfare improving.
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- Ulph, Alistair Mitchell & Ulph, David, 1994. "Trade, Strategic Innovation and Strategic Environmental Policy - a General Analysis," CEPR Discussion Papers 1063, C.E.P.R. Discussion Papers.
- 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 1293-1306, December.
- Ulph, A. & Ulph, D., 1994. "Trade, strategic innovation and strategic environmental policy: a general analysis," Discussion Paper Series In Economics And Econometrics 9416, Economics Division, School of Social Sciences, University of Southampton.
- 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 209-226, June.
- Vonortas, Nicholas S., 1994. "Inter-firm cooperation with imperfectly appropriable research," International Journal of Industrial Organization, Elsevier, vol. 12(3), pages 413-435, September.
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