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Transboundary pollution, R&D spillovers, absorptive capacity and international trade

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  • Dinar, Zeineb

Abstract

In this paper, we consider a non-cooperative and symmetric three-stage game model composed by two regulator-firm hierarchies. By means of adequate emission taxes, original and absorptive research and development (R&D) subsidies we prove that regulators can reach the non-cooperative social optimum. In the presence of free R&D spillovers between countries, as well as the investment in absorptive research, the competition of firms on a common market helps non-cooperating countries to better internalize transboundary pollution. We find that in autarky and common market cases the investment in absorptive R&D leads to multiple non-cooperative equilibria, which may necessitate competing regulators to coordinate an equilibrium. Interestingly, opening markets to international trade increases the per-unit emission-tax and the per-unit original research subsidy. It causes a higher investment in original research and production, and a lower emission ratio.

Suggested Citation

  • 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).
  • Handle: RePEc:zbw:ifwedp:201323
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    File URL: https://www.econstor.eu/bitstream/10419/70798/1/738601713.pdf
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. 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.
    4. Ben Youssef, Slim, 2009. "Transboundary Pollution and Absorptive Capacity," MPRA Paper 17158, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Transboundary pollution; R&D spillovers; absorptive capacity; international trade;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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