English, Article, Journal or magazine article edition: The Incentive to Invest in Environmental-Friendly Technologies: Dynamics Makes a Difference Davide Dragone; Luca Lambertini; Arsen Palestini

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Bookmark: http://trove.nla.gov.au/version/25458
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • The Incentive to Invest in Environmental-Friendly Technologies: Dynamics Makes a Difference
Author
  • Davide Dragone
  • Luca Lambertini
  • Arsen Palestini
Physical Description
  • preprint
Notes
  • The established view on oligopolistic competition with environmental externalities has it that, since firms neglect the external effect, their incentive to invest in R&​D for pollution abatement is nil unless they are subject to some form of environmental taxation. We take a dynamic approach to this issue, using a simple differential game to show that the conclusion reached by the static literature is not robust, as the introduction of dynamics shows that firms do invest in R&​D for environmental-friendly technologies throughout the game, as long as R&​D is accompanied by an output restriction exhibiting a distinctively collusive flavour. We also examine the social planning case and the effects of Pigouvian taxation, to show that there exists a feasible tax rate inducing profit-seeking firms to choose a combination of output and R&​D such that the resulting social welfare level is the same as in the first best
  • pollution, environmental externality, R&​D, differential games, social planning
  • RePEc:rim:rimwps:wp21_09
Language
  • English
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