FEEM working papers "Note di lavoro" series
2000 .074

Voluntary Approaches and the Organisation of Environmental Policy


Authors: Joanna Poyago-Theotoky
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Type: Journal
Keywords: Environmental R&D Cartels, Environmental Research Joint Venture, Cooperative R&D, Emission Tax
JEL n.: 032, L13, Q28
JEL: Journal of Economic Behavior & Organization
Pages: Volume 62, Issue 1, Pages 63–75
Date: 01/2007

Abstract

We consider a setting where firms undertake emission-reducing R&D and the regulator, who sets the emission tax, is unable to commit credibly. Firms are subject to research spillovers in emission reduction. We examine two regimes with respect to the organization of R&D: independent R&D and an environmental R&D cartel (ERC). Environmental R&D is higher in the ERC compared to independent R&D for small damages and also for large damages when R&D is efficient. In contrast, when damages are large and R&D is inefficient the opposite is true. The same ranking applies to the comparison of social welfare.

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Suggested citation: J.A. Poyago-Theotoky, The organization of R&D and environmental policy, Journal of Economic Behavior & Organization, Volume 62, Issue 1, January 2007, Pages 63–75, http://dx.doi.org/10.1016/j.jebo.2004.09.015

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