Environmental Regulations in Private and Mixed Duopolies: Emission Taxes versus Green R&D Subsidies

Sang-Ho Lee and Chul-Hi Park ()

MPRA Paper from University Library of Munich, Germany

Abstract: In the presence of R&D spillovers, we compare environmental regulations between an emission taxes and green R&D subsidies in private and mixed duopoly markets. We show that the green R&D subsidy is better (worse) than the emission tax when the green R&D cost is low (high) irrespective of the R&D spillovers, whereas the existence of a public firm encourages the government to adopt the subsidy policy. We then show that the optimal policy choice depends on the level of the R&D cost and the degree of R&D spillovers. In particular, when the R&D cost is high and the spillover rate is (not) weak, the government should choose the emission tax and (not) privatize the public firm. However, when the R&D cost is low, such a privatization policy is not desirable to society irrespective of the R&D spillovers.

Keywords: emission tax; green R&D subsidy; R&D spillovers; privatization policy (search for similar items in EconPapers)
JEL-codes: H2 L3 Q58 (search for similar items in EconPapers)
Date: 2020-02
New Economics Papers: this item is included in nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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