Market Structure and Environmental Innovation

This paper studies firms’ incentives to invest in environmental R&D under different market structures (Cournot and Bertrand) and environmental policy instruments (emission standards, taxes, tradable permits and auctioned permits). Because of market strategic effects, R&D incentives vary widely across market structures and instruments. For example, when firms’ products are strategic substitutes (i.e., Cournot), either emission standards, taxes or auctioned permits can provide the most incentives. But when firms’ products are strategic complements, either taxes or auctioned permits provide the most incentives. If markets are perfectly competitive, however, permits and emission standards offer similar incentives that are lower than those offered by taxes.


Issue Date:
2002-11
Publication Type:
Journal Article
DOI and Other Identifiers:
Print ISSN 1514-0326 (Other)
Online ISSN 1667-6726 (Other)
PURL Identifier:
http://purl.umn.edu/44294
Published in:
Journal of Applied Economics, Volume 05, Number 2
Page range:
293-325
Total Pages:
33
JEL Codes:
L13; L50; Q28




 Record created 2017-04-01, last modified 2017-08-25

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