R&D IN CLEANER TECHNOLOGY AND INTERNATIONAL TRADE

Slim Ben Youssef

International Game Theory Review (IGTR), 2010, vol. 12, issue 01, 61-73

Abstract: We consider a non-cooperative three-stage game played by two regulator-firm hierarchies. We suppose that raising public funds is socially costly and that market sizes are large enough. Contrary to what might be expected, we show that opening markets to international trade increases the per-unit emission-tax and decreases the per-unit R&D subsidy. It also increases the R&D level, production, and pollution when the marginal damage of pollution is sufficiently high, and, consequently, decreases the emission ratio and the social welfare. However, we think that these results might change if the market sizes are not too large or if we introduce asymmetric information.

Keywords: Costly public funds; market size; common market; emission-tax; R&D subsidy; D62; F12; C72; L51; Q28 (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 C7 D5 D7 M2 (search for similar items in EconPapers)
Date: 2010
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Working Paper: R&D in Cleaner Technology and International Trade (2004)
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DOI: 10.1142/S0219198910002519

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