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Transboundary Pollution and Absorptive Capacity


  • Ben Youssef, Slim


The impact of the investment in absorptive capacity on transboundary pollution is studied by considering two countries each of them regulating a firm. Firms can invest in original research and in absorptive research to lower their pollution intensity. The absorptive research enables a firm to capture part of the original research made by the other one. We show that by means of adequate emission taxes, original and absorptive R&D subsidies, non-cooperating regulators can reach the social optimum. Interestingly, we show that the investment in absorptive research enables non-cooperating regulators to better internalize transboundary pollution. The higher is the ability parameter of absorption, the greater is the proportion of transboundary pollution internalized. Therefore, it is recommended for the international community to make the patent laws more flexible and enabling learning from the research made by others more interesting.

Suggested Citation

  • Ben Youssef, Slim, 2009. "Transboundary Pollution and Absorptive Capacity," MPRA Paper 17158, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:17158

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    References listed on IDEAS

    1. d'Aspremont, Claude & Jacquemin, Alexis, 1988. "Cooperative and Noncooperative R&D in Duopoly with Spillovers," American Economic Review, American Economic Association, vol. 78(5), pages 1133-1137, December.
    2. Zagonari, Fabio, 1998. "International Pollution Problems: Unilateral Initiatives by Environmental Groups in One Country," Journal of Environmental Economics and Management, Elsevier, vol. 36(1), pages 46-69, July.
    3. Hammerschmidt, Anna, 2006. "A strategic investment game with endogenous absorptive capacity," Department of Economics Working Paper Series 106, WU Vienna University of Economics and Business.
    4. Kjetil Bjorvatn & Guttorm Schjelderup, 2002. "Tax Competition and International Public Goods," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(2), pages 111-120, March.
    5. Kamien, Morton I. & Zang, Israel, 2000. "Meet me halfway: research joint ventures and absorptive capacity," International Journal of Industrial Organization, Elsevier, vol. 18(7), pages 995-1012, October.
    6. Slim Ben Youssef, 2009. "Transboundary pollution, R&D spillovers and international trade," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(1), pages 235-250, March.
    7. Anna Hammerschmidt, 2006. "A strategic investment game with endogenous absorptive capacity," Department of Economics Working Papers wuwp092, Vienna University of Economics and Business, Department of Economics.
    8. Milliou, Chrysovalantou, 2006. "Endogenous protection of R and D investments," UC3M Working papers. Economics we066325, Universidad Carlos III de Madrid. Departamento de Economía.
    9. Hoel, Michael, 1997. "Coordination of environmental policy for transboundary environmental problems?," Journal of Public Economics, Elsevier, vol. 66(2), pages 199-224, November.
    10. Ben Youssef, Slim & Zaccour, Georges, 2014. "Absorptive Capacity, R&D Spillovers, Emissions Taxes and R&D Subsidies," Strategic Behavior and the Environment, now publishers, vol. 4(1), pages 41-58, April.
    11. Mansouri, Faysal & Ben Youssef, Slim, 2000. " Regulation and Coordination of International Environmental Externalities with Incomplete Information and Costly Public Funds," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(3), pages 365-388.
    12. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-596, September.
    13. Joanna Poyago-Theotoky, 1999. "A Note on Endogenous Spillovers in a Non-Tournament R & D Duopoly," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 15(3), pages 253-262, November.
    14. Yasuhiro Takarada, 2005. "Transboundary Pollution and the Welfare Effects of Technology Transfer," Journal of Economics, Springer, vol. 85(3), pages 251-275, September.
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    Cited by:

    1. Ben Jebli, Mehdi & Ben Youssef, Slim, 2014. "Timing of adoption of clean technologies, transboundary pollution and international trade," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 8, pages 1-31.
    2. Zeineb Dinar, 2014. "Transboundary Pollution, R&D Spillovers, Absorptive Capacity and International Trade," International Journal of Economics and Financial Issues, Econjournals, vol. 4(3), pages 501-513.
    3. Dinar, Zeineb, 2013. "Transboundary pollution, R&D spillovers, absorptive capacity and international trade," Economics Discussion Papers 2013-23, Kiel Institute for the World Economy (IfW).

    More about this item


    Transboundary Pollution; Original Research; Absorptive Research; Internalization; Social Optimum.;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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