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Incentives for Green R&D in a Dirty Industry under Price Competition

Author

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  • Indrani Roy chowdhury

    (Jamia Millia islamia)

Abstract

In an oligopolistic framework with price competition, we examine the effect of abatement taxes, as well as emission caps on the incentives for adopting a green technology. We identify two new strategic effects, namely the relative efficiency effect, and the competition softening effect, that affect the incentive for green R&D. Under an abatement tax, R&D incentives increase whenever the new technology is non-drastic, and the demand function is either approximately linear, or not too elastic. Another sufficient condition is that the market size be sufficiently large. With emission caps, the result depends on how green the new technology is.

Suggested Citation

  • Indrani Roy chowdhury, 2009. "Incentives for Green R&D in a Dirty Industry under Price Competition," Economics Bulletin, AccessEcon, vol. 29(3), pages 2265-2274.
    • Handle: RePEc:ebl:ecbull:eb-09-00425
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    File URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I3-P72.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Prabal Roy Chowdhury, 2011. "The Porter hypothesis and hyperbolic discounting," Economics Bulletin, AccessEcon, vol. 31(1), pages 167-176.
    2. Indrani Roy Chowdhury & Sandwip K. Das, 2011. "Environmental regulation, green R&D and the Porter hypothesis," Indian Growth and Development Review, Emerald Group Publishing Limited, vol. 4(2), pages 142-152, September.

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    More about this item

    Keywords

    Abatement tax; emission caps; environmental policy; green R&D; price competition.;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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