International R&D formations and strategic environmental policy

Takeshi Iida

Environment and Development Economics, 2020, vol. 25, issue 5, 509-528

Abstract: We examine relations between strategic environmental policy, international R&D cartels and research joint ventures (RJVs), using a third-country model with Cournot duopoly. We indicate that forming an R&D/RJV cartel reduces governments' incentives to extract rent from consumers in the third country. Contrary to conventional wisdom, we find that social welfare under R&D cartels with full information sharing, i.e., RJV cartels, cannot surpass that under R&D/RJV competition, whereas forming an R&D/RJV cartel works well for environmental investment. Among the policy implications, we show that governments can maximize global welfare by collectively determining whether to allow R&D/RJV cartels.

Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:cup:endeec:v:25:y:2020:i:5:p:509-528_5

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