Investment in Green Technology and Entry Deterrence

Strandholm John C. () and Ana Espinola-Arredondo
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Strandholm John C.: Johnson College of Business and Economics, University of South Carolina Upstate, 160 East St John St, Spartanburg, SC 29306, USA

The B.E. Journal of Economic Analysis & Policy, 2020, vol. 20, issue 2, 18

Abstract: This paper analyzes an entry-deterrence model in which the incumbent decides whether to invest in research and development (R&D) that promotes clean technology. We consider the case in which the entrant could benefit from a technology spillover and analyze the conditions that facilitate the incumbent’s entry-deterrence behavior. We show that higher levels of the spillover make entry more attractive compared to a standard entry game. In addition, regulator and incumbent prefer entry when the spillover from clean technology is sufficiently high and the cost of investing in R&D is relatively low. However, preferences are misaligned when the spillover and cost of R&D are low.

Keywords: entry deterrence; emission fee; research and development; spillover (search for similar items in EconPapers)
JEL-codes: H23 L12 O32 Q58 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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DOI: 10.1515/bejeap-2018-0355

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