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Apportioning indivisible damage and strategic diffusion of pollution abatement technology

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  • Yi Li

    (Zhongnan University of Economics and Law)

Abstract

I examine the problem of apportioning liability among competing firms in an industry where the environmental damage is a joint product of the actions taken by all firms. In particular, I analyze the effect of alternative apportionment rules on adoption and strategic diffusion of pollution abatement technology. In a duopoly where industry wide technological diffusion is welfare enhancing, I characterize the second-best optimal apportionment rules. Inducing technology transfer requires placing a larger burden of the liability on the ex ante cleaner firm i.e., the one with a more efficient abatement technology.

Suggested Citation

  • Yi Li, 2019. "Apportioning indivisible damage and strategic diffusion of pollution abatement technology," Journal of Economics, Springer, vol. 126(1), pages 19-42, January.
    • Handle: RePEc:kap:jeczfn:v:126:y:2019:i:1:d:10.1007_s00712-018-0610-8
    DOI: 10.1007/s00712-018-0610-8
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    References listed on IDEAS

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    Cited by:

    1. Charreire, Maxime & Langlais, Eric, 2021. "Should environment be a concern for competition policy when firms face environmental liability?," International Review of Law and Economics, Elsevier, vol. 67(C).
    2. Yan, Yan & Li, Yi, 2023. "Technology spillovers, strategic environmental policy, and foreign direct investment," Energy Economics, Elsevier, vol. 127(PA).

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