Ben Youssef, Slim and Zaccour, Georges (2009): Absorptive Capacity, R&D Spillovers, Emissions Taxes and R&D Subsidies.
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We consider in this paper a duopoly competing in quantities and where�firms can invest in R&D to control their emissions. We distinguish between effort carried out to acquire first-hand knowledge (original R&D)and effort to develop an absorptive capacity to be able to capture part of the knowledge developed by rival. There are also free R&D spillovers between firms. We show that a regulator can reach the social optimal outcome by implementing a taxation and subsidy policy. The regulator subsidizes at a higher rate original R&D effort than its absorptive capacity counterpart when the free spillovers are high, and the contrary may occur when the free spillovers are low. When the cost of original research is lower than the one of absorptive research, or when the learning parameter of the latter is low, then the socially optimal level of original research is higher than the one of absorptive capacity. We have the opposite result when the cost of absorptive capacity is lower than the one of original research and when the learning parameter is high.
|Item Type:||MPRA Paper|
|Original Title:||Absorptive Capacity, R&D Spillovers, Emissions Taxes and R&D Subsidies|
|Keywords:||Pollution Control, Original R&D, Absorptive Capacity, Taxes and Subsidies, Social Optimum|
|Subjects:||D - Microeconomics > D6 - Welfare Economics > D62 - Externalities
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
|Depositing User:||Slim Ben Youssef|
|Date Deposited:||28. Aug 2009 01:00|
|Last Modified:||19. Feb 2013 11:16|
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