Market Structure and Environmental Innovation

Juan-Pablo Montero

Journal of Applied Economics, 2002, vol. 5, 293-325

Abstract: This paper studies firmsÂ’ 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 firmsÂ’ products are strategic substitutes (i.e., Cournot), either emission standards, taxes or auctioned permits can provide the most incentives. But when firmsÂ’ 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.

Keywords: environment; regulation; market structure; innovation (search for similar items in EconPapers)
JEL-codes: L13 L50 Q28 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (48)

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Journal Article: Market Structure and Environmental Innovation (2002)
Working Paper: Market Structure and Environmental Innovation (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:cem:jaecon:v:5:y:2002:n:2:p:293-325

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