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Cournot Competition and "Green" Innovation: An Inverted-U Relationship

Luca Lambertini (), Joanna Poyago-Theotoky and Alessandro Tampieri ()

No 2015.73, Working Papers from Fondazione Eni Enrico Mattei

Abstract: We examine the relationship between competition and innovation in an industry where production is polluting and R&D aims to reduce emissions ("green" innovation). We present an n-firm oligopoly where firms compete in quantities and decide their investment in "green" R&D. When environmental taxation is exogenous, aggregate R&D investment always increases with the number of firms in the industry. Next we analyse the case where the emission tax is set endogenously by a regulator (committed or time-consistent) with the aim to maximise social welfare. We show that an inverted-U relationship exists between aggregate R&D and industry size under reasonable conditions, and is driven by the presence of R&D spillovers.

Keywords: "Green" R&D; R&D Spillovers; Emission Taxation; Time-Consistent Emission Tax; Pre-Commited Emission Tax (search for similar items in EconPapers)
JEL-codes: Q55 Q56 O30 L13 (search for similar items in EconPapers)
Date: 2015-08
New Economics Papers: this item is included in nep-acc, nep-bec, nep-com, nep-cse, nep-ene, nep-env, nep-ind, nep-ino and nep-res
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Related works:
Journal Article: Cournot competition and “green” innovation: An inverted-U relationship (2017) Downloads
Working Paper: Cournot Competition and "Green" Innovation: An Inverted-U Relationship (2015) Downloads
Working Paper: Cournot Competition and "Green" Innovation: An Inverted-U Relationship (2015) Downloads
Working Paper: Cournot Competition and “Green” Innovation: An Inverted-U Relationship (2014) Downloads
Working Paper: Cournot Competition and "Green" Innovation: An Inverted-U Relationship (2014) Downloads
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