Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70798
Authors: 
Dinar, Zeineb
Year of Publication: 
2013
Series/Report no.: 
Economics Discussion Papers 2013-23
Abstract: 
In this paper, we consider a non-cooperative and symmetric three-stage game model composed by two regulator-firm hierarchies. By means of adequate emission taxes, original and absorptive research and development (R&D) subsidies we prove that regulators can reach the non-cooperative social optimum. In the presence of free R&D spillovers between countries, as well as the investment in absorptive research, the competition of firms on a common market helps non-cooperating countries to better internalize transboundary pollution. We find that in autarky and common market cases the investment in absorptive R&D leads to multiple non-cooperative equilibria, which may necessitate competing regulators to coordinate an equilibrium. Interestingly, opening markets to international trade increases the per-unit emission-tax and the per-unit original research subsidy. It causes a higher investment in original research and production, and a lower emission ratio.
Subjects: 
Transboundary pollution
R&D spillovers
absorptive capacity
international trade
JEL: 
C72
H21
O32
D62
Creative Commons License: 
http://creativecommons.org/licenses/by/3.0/
Document Type: 
Working Paper

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