Optimal environmental taxation, R&D subsidization and the role of market conduct
No 200309, Discussion Paper Series, Department of Economics from Department of Economics, University of St. Andrews
This paper examines the optimal environmental policy in a differentiated goods duopoly with either price- or quantity-setting firms, where firms invest in environmental R&D that reduces emissions. It is shown that in quantity (Cournot) competition, the emission tax is always lower than marginal damages. With price (Bertrand) competition, the emission tax is generally lower than marginal damages. However, for the case of very undifferentiate products, the emission tax is equal to marginal damages, that is it approaches the first-best tax. Moreover, the Cornot emission tax is always lower than the Bertrand emission tax. Concerning the R&D subsidy, the comparison crucially depends on the degree of product differentiation in the initial emissions coeffiecient.
Keywords: environmental R&D; emission tax; R&D subsidy; differentiated goods; Cournot competition; Bertrand competition. (search for similar items in EconPapers)
JEL-codes: Q28 O38 H29 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ino and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.st-andrews.ac.uk/~wwwecon/papers/dp0309.pdf [302 Found]--> https://www.st-andrews.ac.uk/~wwwecon/papers/dp0309.pdf)
Journal Article: Optimal Environmental Taxation, R&D Subsidization and the Role of Market Conduct (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:san:wpecon:0309
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in Discussion Paper Series, Department of Economics from Department of Economics, University of St. Andrews School of Economics and Finance, University of St. Andrews, Fife KY16 9AL. Contact information at EDIRC.
Bibliographic data for series maintained by the School of Economics ().