A differential game of R&D investment for pollution abatement in different market structures

Yongxi Yi, Rongwei Xu () and Sheng Zhang

Physica A: Statistical Mechanics and its Applications, 2019, vol. 524, issue C, 587-600

Abstract: This paper extends the recent work of Shibata from static perspective to dynamic perspective, presents a differential game model of pollution abatement R&D investment with emission tax. Two key factors to continuously measuring the intensity of market competition and pollution abatement R&D investment spillovers respectively are included in the model. Results show that before the termination point of the project, as the market becomes more competitive, noncooperative R&D investment is more likely to be preferred. There are cases in which, contrary to conventional wisdom, when the market is perfectly competitive, the cooperative pollution abatement R&D investment is zero but the noncooperative investment is not zero; the pollution abatement R&D investment spillovers have some positive influence on optimal cooperative R&D investment while make the optimal noncooperative R&D investment decrease.

Keywords: Differential game; Pollution abatement R&D investment; Oligopolistic market structure; R&D investment spillovers (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:524:y:2019:i:c:p:587-600

DOI: 10.1016/j.physa.2019.04.118

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