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Linking innovation investment and environmental performance: an impure dynamic public good model

Author

Listed:
  • Massimiliano Corradini

    () (Dipartimento di Economia, Università di Roma Tre)

  • Valeria Costantini

    () (Dipartimento di Economia, Università di Roma Tre and SEEDS - Sustainability Environmental Economics and Dynamic Studies.)

  • Massimiliano Mazzanti

    () (Dipartimento di Economia e Management, Università di Ferrara and SEEDS - Sustainability Environmental Economics and Dynamic Studies.)

  • Susanna Mancinelli

    () (Dipartimento di Economia e Management, Università di Ferrara and SEEDS - Sustainability Environmental Economics and Dynamic Studies.)

Abstract

This paper develops a theoretical model in order to study how investment decisions in innovation taken by a single agent are influenced by environmental externalities produced by investment decisions taken by other agents. The model acts in a dynamic framework, where knowledge stock represents the capital good on which investment decisions are taken over time. Knowledge stock is considered as an impure public good which results in both public and private benefits. We first show that the reaction function between one representative agents' investments in innovation and the other agents' investments in the public characteristic of the impure public good has a positive slope under general conditions. We also find that its sensitiveness is affected by the elasticity of substitution in the benefit function as well as by the degree of complementarity between public and private characteristics.

Suggested Citation

  • Massimiliano Corradini & Valeria Costantini & Massimiliano Mazzanti & Susanna Mancinelli, 2014. "Linking innovation investment and environmental performance: an impure dynamic public good model," SEEDS Working Papers 0814, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Apr 2014.
  • Handle: RePEc:srt:wpaper:0814
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    File URL: http://www.sustainability-seeds.org/papers/RePec/srt/wpaper/0814.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    impure public good; environmental externality; innovation.;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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