On Green R&D Organisation and Environmental Regulation: Cooperation vs. Non-Cooperation

Marie-Laure Cabon-Dhersin and Natacha Raffin

Chapter 7 in Green Innovation and Industrial Organization, 2026, pp 165-189 from World Scientific Publishing Co. Pte. Ltd.

Abstract: In this chapter, we compare taxes and standards as environmental policies in a duopoly model where production generates pollution. To lower their emissions, firms invest in upstream green R&D (in the presence of technological spillovers) either cooperatively or non-cooperatively, and then compete in quantities. The outcomes of the two policies are identical when firms do not cooperate in R&D; R&D cooperation under taxes always improves social welfare by increasing both abatement efforts and consumer surplus. Conversely, R&D cooperation under standards pushes firms to reduce production, which is detrimental to consumers though better for the environment and more profitable for firms.

Keywords: Green Innovation; Industrial Organization; R&D Smoothing; Emissions Tax; Porter Hypothesis; Corporate Social Responsibility; Public Eco-Firm; Foreign Direct Investment (FDI); Environmental Taxes; Voluntary Agreements; Mandatory Regulation; Green Consumers; Green R&D Organization; Environmental Regulation; Sustainable Development (search for similar items in EconPapers)
JEL-codes: F18 L16 L51 Q5 Q55 (search for similar items in EconPapers)
Date: 2026
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