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

Zeineb Dinar

No 2013-23, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

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.

Keywords: Transboundary pollution; R&D spillovers; absorptive capacity; international trade (search for similar items in EconPapers)
JEL-codes: C72 D62 H21 O32 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-cse, nep-ene, nep-env, nep-gth and nep-ino
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http://www.economics-ejournal.org/economics/discussionpapers/2013-23
https://www.econstor.eu/bitstream/10419/70798/1/738601713.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201323

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