The organization of R&amp;D and environmental policy

Poyago‐Theotoky, Joanna

doi:10.1016/j.jebo.2004.09.015

Cited by 144 publications

(117 citation statements)

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“…The marginal cost of production is assumed constant and equal to c for both firms, with a > c > 0. Following Petrakis and Xepapadeas (2001);Poyago-Theotoky (2007) and Ulph (1996), after an appropriate choice of measurement units such that each unit of output generates one unit of pollution, we express firm i's (net) emissions as where w i stands for environmental innovation…”

Section: The Modelmentioning

confidence: 99%

“…See for instance the papers by Katsoulacos and Xepapadeas (1995;, Damania (1996), Carlsson (2000), Innes and Bial (2002), Antelo andLoureiro (2009), Coria (2009) and more recently by McDonald and Poyago-Theotoky (2014). On the other hand, the list of papers where the regulator is not able to commit is rather short including the contributions by Poyago-Theotoky (2007;2010) and more recently by Ouchida and Goto (2014) 2 . Other papers, such as those by Chiou and Hu (2001), Montero (2002), Gil-Moltó and Varvarigos (2013) assume that either the level of the policy instrument or the target of the environmental policy are exogenously given.…”

Section: Introductionmentioning

confidence: 99%

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The timing of environmental policy in a duopolistic market

Moner‐Colonques

Rubio

2015

EARN

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Section: The Modelmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

The timing of environmental policy in a duopolistic market

Moner‐Colonques

Rubio

2015

EARN

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“…using patents, and the interaction with environmental policy (David and Sinclair-Desgagn 2005;Goeschl and Perino 2016;Hall and Helmers 2013;Laffont and Tirole 1996). In terms of the type of innovation, environmental R&D can either be cost-reducing (Bosetti et al 2009;Hall and Helmers 2013), pollution-reducing (Perino and Requate 2012;Poyago-Theotoky 2007) or, as in the present paper, technology enabling (Barrett 2006;Hoel and De Zeeuw 2010).…”

Section: Introductionmentioning

confidence: 87%

“…Important examples include CO 2 abatement technologies (Bosetti et al 2009;Perino and Requate 2012;Poyago-Theotoky 2007) and 'breakthrough technologies' like no-emission * I thank two anonymous reviewers, the editor David Maddison, conference participants at the World Congress of Environmental and Resource Economists (WCERE) 2014 in Istanbul, the AUROE Young Academics Workshop 2014 in Kiel, seminar participants at the FZU-ZEW Monthly Brown Bag Seminar, the Brown Bag Seminar at the Chair of Environmental Economics, and participants of the climate engineering summer schools at Harvard University 2013 and Heidelberg 2014 for their helpful comments. The research was supported by the German Research Foundation (DFG), grant HE 7551/1-1.…”

Section: Introductionmentioning

confidence: 99%

STRATEGIC CONFLICTS ON THE HORIZON: R&D INCENTIVES FOR ENVIRONMENTAL TECHNOLOGIES

Heyen

2016

Clim. Change Econ.

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Technological innovation is a key strategy for tackling climate change and other environmental problems. The required R&D expenditures however are substantial and fall on self-interested countries. Thus, the prospects of successful innovation critically depend on innovation incentives. This paper focuses on a specific mechanism for strategic distortions in this R&D game. In this mechanism, the outlook of future conflicts surrounding technology deployment directly impacts on the willingness to undertake R&D. Apart from free-riding, a different deployment conflict with distortive effects on innovation can occur. Low deployment costs and heterogeneous preferences might give rise to 'free-driving' (Weitzman 2015): The country with the highest preference for technology deployment, the free driver, may dominate the deployment outcome to the detriment of others. The present paper develops a simple two stage model for analysing how technology deployment conflicts, free-riding and free-driving, shape R&D incentives of two asymmetric countries. The framework gives rise to rich findings, underpinning the narrative that future deployment conflicts extend to the R&D stage. While the outlook of free-riding unambiguously weakens innovation incentives, the findings for free-driving are more complex, including the possibility of excessive R&D as well as incentives for counter-R&D.

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“…In particular, Kamien et al (1992) considered a deterministic model related to d 'Aspremont and Jacquemin's (1988) and extended the analysis to a richer set of R&D cooperation scenarios. In relation to a polluting industry, emissions abatement R&D cooperation vs. independent R&D has received limited attention, with the exception of deterministic analysis literature by Poyago-Theotoky (2002), Sandonís andMariel (2004), Scott (1996), Chiou andHu (2001), andPoyago-Theotoky (2007). This literature typically considers non-tournament models of abatement R&D, where a deterministic relationship is assumed between the R&D investment and the level of emissions abatement, with diminishing returns on investment.…”

Section: Cooperative Environmental Randd and Uncertaintymentioning

confidence: 99%

Emissions abatement R&D and environmental policy

Pereira¹

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This dissertation studies the interaction between environmental policy, market structure and firms' incentives to invest in emissions reduction technology or emissions abatement research and development (R&D). It consists of three individual papers. The first paper examines how the intensity of market competition may affect the environmental policy. The second paper studies the conditions under which the design of an environmental policy can be beneficial for firms and society. The third paper analyses the effect of environmental R&D organisational structures on firms' innovation activities, profits, and social welfare when the R&D outcome is uncertain.The first paper investigates the optimal environmental policy (the mix of emissions tax and R&D subsidy) when two firms, producing differentiated products, compete in the output market over time. Firms compete over supply schedules, which encompass a continuum of market structures from Bertrand to Cournot. While production generates environmentally damaging emissions, firms can undertake R&D, which has the sole purpose of reducing emissions. In addition to characterising the optimal policy, we examine how the optimal tax and subsidy, and the optimal level of abatement change as competition intensifies, as the dynamic parameters change and as the investment in abatement technology changes. In this setting, increased competition no longer necessarily leads to an increase in welfare. Instead, there are two forces. Competition increases welfare through its impact on the final goods price. However, lower prices result in larger quantities and more pollution. Our contribution is to show how this impact depends on the extent of the market, the nature of preferences and the technology.The Porter Hypothesis, formulated by Michael Porter (1991), states that a well-designed environmental policy could encourage innovation and be beneficial for firms and society. In the second paper, we investigate the conditions under which the design of an environmental policy can align social and private interests. Results consistent with the Porter Hypothesis are derived without any behavioural assumptions or bounded rationality arguments, as it is commonly the case in the related literature. N symmetric firms compete in the output market by producing and selling homogeneous goods. Production entails the emission of a pollutant, which may be taxed.The general conditions for firms' profits and social welfare to be higher under an emissions tax than under no tax are determined. The key insight is that, for the representative firm's profit to increase with an increase in emissions tax, the emissions tax cost pass-through must be greater ii than the net emissions per unit of production, adjusted for the number of competing firms. As the intensity of competition increases, firms are more likely to benefit from an emissions tax, as the tax facilitates the exercise of market power.The third paper analyses firms' and social planner's choices of R&D cooperation when the innovation outcome i...

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The organization of R&D and environmental policy

Cited by 144 publications

References 12 publications

The timing of environmental policy in a duopolistic market

The timing of environmental policy in a duopolistic market

STRATEGIC CONFLICTS ON THE HORIZON: R&D INCENTIVES FOR ENVIRONMENTAL TECHNOLOGIES

Emissions abatement R&D and environmental policy

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