Investment strategy of low-carbon technology in a competitive market: Technology R&D or purchases?

Man Yu and Kanying Liu

Economic Modelling, 2025, vol. 151, issue C

Abstract: This study investigates the issues of manufacturers' low-carbon technology investment strategies and their impacts while considering innovation uncertainty in a competitive market. We build game theoretical models to analyze various low-carbon technology investment formats. The findings reveal that manufacturers' investment decisions are heavily influenced by the success probability of research and development (R&D), the intensity of competition, and consumers' low-carbon awareness. It also shows that, under certain circumstances, a manufacturer's R&D behavior can benefit its rival supply chain. Then, we derive the conditions under which low-carbon technology R&D or technology purchases will be selected. Surprisingly, both manufacturers adopt the same type of investment method. This implies that uncertainty in innovation is not a barrier to investing in low-carbon technology R&D. However, bilateral R&D on low-carbon technology may harm competitive supply chains. This study sheds light on how enterprises can make best decisions regarding low-carbon technology investments while considering green development.

Keywords: Low-carbon technology investment; R&D; Innovation uncertainty; Technology purchase; Carbon emission reduction; Competing supply chains (search for similar items in EconPapers)
JEL-codes: C72 L11 L13 O14 O32 Q55 Q56 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:151:y:2025:i:c:s0264999325001853

DOI: 10.1016/j.econmod.2025.107190

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