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Market Structure and Environmental Innovation

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  • Montero, Juan-Pablo

Abstract

This paper studies firms’ incentives to invest in environmental R&D under different market structures (Cournot and Bertrand) and environmental policy instruments (emission standards, taxes, tradable permits and auctioned permits). Because of market strategic effects, R&D incentives vary widely across market structures and instruments. For example, when firms’ products are strategic substitutes (i.e., Cournot), either emission standards, taxes or auctioned permits can provide the most incentives. But when firms’ products are strategic complements, either taxes or auctioned permits provide the most incentives. If markets are perfectly competitive, however, permits and emission standards offer similar incentives that are lower than those offered by taxes.

Suggested Citation

  • Montero, Juan-Pablo, 2002. "Market Structure and Environmental Innovation," Journal of Applied Economics, Universidad del CEMA, vol. 5(2), pages 1-33, November.
    • Handle: RePEc:ags:jaecon:44294
    DOI: 10.22004/ag.econ.44294
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    References listed on IDEAS

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    More about this item

    Keywords

    Marketing; Environmental Economics and Policy;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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