R&D for green technologies in a dynamic oligopoly: Schumpeter, arrow and inverted-U’s

Gustav Feichtinger, Luca Lambertini (), George Leitmann and Stefan Wrzaczek

European Journal of Operational Research, 2016, vol. 249, issue 3, 1131-1138

Abstract: We extend a well-known differential oligopoly game to encompass the possibility for production to generate a negative environmental externality, regulated through Pigouvian taxation and price caps. We show that, if the price cap is set so as to fix the tolerable maximum amount of emissions, the resulting equilibrium investment in green R&D is indeed concave in the structure of the industry. Our analysis appears to indicate that inverted-U-shaped investment curves are generated by regulatory measures instead of being a ‘natural’ feature of firms’ decisions.

Keywords: Dynamic games; Oligopoly; Environmental externality; R&D (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (9)

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Working Paper: R&D for green technologies in a dynamic oligopoly: Schumpeter, Arrow and inverted-U s (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:249:y:2016:i:3:p:1131-1138

DOI: 10.1016/j.ejor.2015.09.025

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