Environmental Policy, Mergers and Environmental R&D with Spillovers

Chenyu Wang
Additional contact information
Chenyu Wang: School of Economics and Trade, Hunan University, Changsha 410079, China

Revista Economía, 2020, vol. 43, issue 86, 1-38

Abstract: This project lies at the frontier between environmental economics and industrial organization. We use a duopoly setting of a three-stage game; in the first stage, the government chooses an emission tax and aims for maximizing welfare; in the second stage, firms use R&D to reduce their emissions; in the last stage, firms compete a la Cournot with differentiated products. We focus on two policy regimes and three scenarios, namely regimes of competition and merger and scenarios of commitment, non-commitment, and exogenous tax. The study focuses on two major questions: (1) what is the effect of merger on R&D, and the effect of commitment on R&D? (2)what is the effect of merger and commitment on the economy? Results are obtained through numerical simulations of the model. We find that: (i) Merger has a positive effect on R&D under non-commitment and the exogenous tax scenarios. (ii) Under commitment, if goods are imperfect substitutes or homogenous, merger has a negative effect on R&D; if goods are complements or independent, merger has a positive effect on R&D. (iii) For any types of goods under any regime, commitment has a negative effect on R&D.

Keywords: Environmental Economics; Industrial Organization; Environmental R&D; Environmental Modelling (search for similar items in EconPapers)
JEL-codes: L50 O30 Q58 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://revistas.pucp.edu.pe/index.php/economia/article/view/22531/21721 (application/pdf)

Related works:
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:pcp:pucrev:y:2020:i:86:p:1-38

Access Statistics for this article

Revista Economía is currently edited by Luis García

More articles in Revista Economía from Fondo Editorial - Pontificia Universidad Católica del Perú Av. Universitaria 1801, San Miguel, Lima, Perú. Contact information at EDIRC.
Bibliographic data for series maintained by ().