Understanding the dynamics of clean technology: implications for policy and industry

Jason Walter

Environmental Economics and Policy Studies, 2018, vol. 20, issue 2, No 6, 365-386

Abstract: Abstract Using an optimal control approach, I examine the effectiveness of various strategies for firms to investing in clean technology when faced with an emissions tax in a duopolistic market. Explicitly allowing for the cumulative nature of R&D, I show that emissions per unit of output are lowest when the firms cooperate in R&D, as compared to the scenarios when they compete in R&D or merge into a single entity. It is shown that R&D cooperation leads to the highest level of social welfare among the three alternative scenarios, and that a profit maximizing firm will never choose the most environmentally conscience investment strategy. In contrast to the traditional static analysis, which ignores the temporal effects associated with R&D, my dynamic analysis has implications for emission tax policy and environmental innovation to improve overall welfare.

Keywords: Dynamic investment; Clean technology; Emission taxation (search for similar items in EconPapers)
JEL-codes: C61 O31 Q55 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1007/s10018-017-0197-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:envpol:v:20:y:2018:i:2:d:10.1007_s10018-017-0197-2

Ordering information: This journal article can be ordered from
http://www.springer. ... mental/journal/10018

DOI: 10.1007/s10018-017-0197-2

Access Statistics for this article

Environmental Economics and Policy Studies is currently edited by Ken-Ichi Akao

More articles in Environmental Economics and Policy Studies from Springer, Society for Environmental Economics and Policy Studies - SEEPS Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().