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Research Joint Ventures and Optimal Emissions Taxation

Stuart McDonald () and Joanna Poyago-Theotoky

No 455, Discussion Papers Series from University of Queensland, School of Economics

Abstract: This paper performs a comparison of two well known approaches for modelling R&D spillovers associated with investment in E-R&D, namely dAspremont-Jacquemin and Kamien-Muller-Zang. We show that there is little qualitative difference between the models in terms of total surplus delivered when selecting the optimal tax regime when there is precommitment under cooperative regimes in which firms coordinate expenditures to maximize joint profits. However, under non-cooperative regimes there is marked difference, with the model of Kamien- Muller-Zang leading to higher taxation rates when firms share information. Furthermore, we argue that the Kamien-Muller-Zang model is of questionable validity when modelling R&D on emissions reducing technology due to counter intuitive results showing a positive relationhip between R&D spillovers and emissions taxes.

New Economics Papers: this item is included in nep-acc, nep-ene, nep-env and nep-ino
Date: 2012
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