The Impact of Innovation on a Polluting Firm's Regulation Driven Decision to Upgrade Its Capital Stock

Amitrajeet Batabyal and Peter Nijkamp

International Regional Science Review, 2008, vol. 31, issue 4, 389-403

Abstract: The extant literature has paid scant theoretical attention to the tripartite interaction among increasing environmental regulations, the resulting decision by a polluting firm to upgrade its capital stock, and the impact of innovation on this decision. Hence, the authors theoretically analyze this tripartite interaction when a polluting firm faces adjustment costs to upgrade its capital stock. First, they construct a dynamic model of regulation driven investment by a polluting firm. Second, they specify the conditions characterizing efficient investment. Third, they study the impact of an unanticipated increase in innovation on the polluting firm's steady-state capital stock. Fourth, they analyze the impact of an anticipated increase in innovation on the polluting firm's steady-state capital stock. Finally, the authors discuss the relationship between the polluting firm's internal shadow price of capital and the stock market value of a unit of this firm's capital.

Keywords: capital stock; dynamics; innovation; investment; polluting firm (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0160017608321162 (text/html)

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:sae:inrsre:v:31:y:2008:i:4:p:389-403

DOI: 10.1177/0160017608321162

Access Statistics for this article

More articles in International Regional Science Review
Bibliographic data for series maintained by SAGE Publications ().