Sustainability Agreements and First Mover Disadvantages

Johannes Paha

Journal of Competition Law and Economics, 2023, vol. 19, issue 3, 357-366

Abstract: This article presents a model where the managers of two firms decide about adopting a sustainable production technology (or product). It demonstrates under what conditions a firm experiences a first mover disadvantage from going green, which may potentially be overcome by a sustainability agreement serving as a device for equilibrium selection in a coordination game with multiple equilibria. If the technology adoption game is, however, a prisoner’s dilemma, the sustainability agreement must be structured like a hardcore cartel.

Keywords: Anticompetitive agreement; Climate; competition policy; Coordination game; First mover disadvantage; Sustainability (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jcomle:v:19:y:2023:i:3:p:357-366.

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