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Transboundary Pollution, R&D Spillovers, Absorptive Capacity and International Trade

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  • Zeineb Dinar

    (University of Tunis el Manar, FSEGT and LAREQUAD Campus Universitaire, El Manar II, Tunis 2092, Tunisia)

Abstract

In this paper, we study the effects of absorptive capacity and R&D spillovers on cross -border pollution in a game played by two regulator-firm hierarchies. By means of a tax per-unit of pollution, a subsidy per- unit of original research and a subsidy per-unit of absorptive research, the regulators can reach the first -best outcome. We show that, in addition to free R&D spillovers and absorptive research, competition of firms on the common market help non -cooperating countries to better internalize transboundary pollution. More importantly, opening borders increase the per -unitemission- tax and decrease the per-unit original research subsidy. Thus, when the investment-costparameters are sufficiently high, the international trade increases the original research, production.Consequently, the emission ratio is lower.

Suggested Citation

  • Zeineb Dinar, 2014. "Transboundary Pollution, R&D Spillovers, Absorptive Capacity and International Trade," International Journal of Economics and Financial Issues, Econjournals, vol. 4(3), pages 501-513.
    • Handle: RePEc:eco:journ1:2014-03-6
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    More about this item

    Keywords

    Transboundary pollution ; R&D spillovers; absorptive capacity; international trade;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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