EconPapers    
Economics at your fingertips  
 

Pollution abatement with disruptive R&D investment

John C. Strandholm, Ana Espinola-Arredondo () and Felix Munoz-Garcia

Resource and Energy Economics, 2021, vol. 66, issue C

Abstract: This paper examines a model of investment in abatement where polluting firms produce output while investing in R&D. This investment, however, increases production costs, thus disrupting first-period output. We identify three equilibrium profiles where firms choose to either: (1) invest in R&D alone (thus rationalizing a common modeling assumption in the literature); (2) produce output alone; or (3) engage in both activities. We evaluate how the emergence of each result is affected by the market structure in which firms compete and by the severity of spillover effects. We then measure welfare levels in each equilibrium profile. Overall, we show that firms endogenously choose to focus on R&D only when the market is concentrated and spillover effects are small. In other type of industries, our findings indicate that firms may focus on output production or engage in both activities under relatively large conditions.

Keywords: Abatement; Emission fees; R&D disruptive effects; Equilibrium profiles; Spillovers (search for similar items in EconPapers)
JEL-codes: H23 L12 O32 Q58 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0928765521000439
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Pollution Abatement with Disruptive R&D Investment (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:66:y:2021:i:c:s0928765521000439

DOI: 10.1016/j.reseneeco.2021.101258

Access Statistics for this article

Resource and Energy Economics is currently edited by J. F. Shogren and S. Smulders

More articles in Resource and Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2022-08-19
Handle: RePEc:eee:resene:v:66:y:2021:i:c:s0928765521000439