Transboundary Pollution and Absorptive Capacity

Ben Youssef, Slim (2009): Transboundary Pollution and Absorptive Capacity.

Abstract

The impact of the investment in absorptive capacity on transboundary pollution is studied by considering two countries each of them regulating a firm. Firms can invest in original research and in absorptive research to lower their pollution intensity. The absorptive research enables a firm to capture part of the original research made by the other one. We show that by means of adequate emission taxes, original and absorptive R&D subsidies, non-cooperating regulators can reach the social optimum. Interestingly, we show that the investment in absorptive research enables non-cooperating regulators to better internalize transboundary pollution. The higher is the ability parameter of absorption, the greater is the proportion of transboundary pollution internalized. Therefore, it is recommended for the international community to make the patent laws more flexible and enabling learning from the research made by others more interesting.

• Item Type: MPRA Paper
• Language: English
• Keywords: Transboundary Pollution; Original Research; Absorptive Research; Internalization; Social Optimum.
• Subjects: D - Microeconomics > D6 - Welfare Economics > D62 - Externalities; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O32 - Management of Technological Innovation and R&D; 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

References

Ben Youssef, S, 2009, ‘’Transboundary Pollution, R&D Spillovers and International Trade’’, The Annals of Regional Science, 43, 235-250.

Ben Youssef, S. and G. Zaccour, 2009, ‘’Absorptive Capacity, R&D Spillovers, Emissions Taxes and R&D Subsidies’’, HEC Montréal: Les Cahiers du GERAD No. G-2009-41, MPRA Paper No. 16984.

Bjorvatn, K. and G. Schjelderup, 2002, ‘’Tax Competition and International Public Goods’’, International Tax and Public Finance, 9, 111-120.

Cohen, W.M. and D.A. Levinthal, 1989, ‘’Innovation and Learning: The Two Faces of R&D’’, The Economic Journal, 99, 569-596.

D’Aspremont, C. and A. Jacquemin, 1988, ‘’Cooperative and Noncooperative R&D in Duopoly with Spillovers’’, The American Economic Review, 78, 1133-1137.

D’Aspremont, C. and A. Jacquemin, 1990, ‘’Cooperative and Noncooperative R&D in Duopoly with Spillovers:Erratum’’, The American Economic Review, 80, 641-642.

Hammerschmidt, A, 2006, ‘’A Strategic Investment Game with Endogenous Absorptive Capacity’’, Vienna University of Economics & B.A, Working Paper No. 92.

Hoel, M, 1997, ‘’Coordination of Environmental Policy for Transboundary Environmental Problems ?’’, Journal of Public Economics, 66, 199-224.

Kamien, M.I. and I. Zang, 2000, ‘’Meet me Halfway: Research Joint Ventures and Absorptive Capacity’’, International Journal of Industrial Organization, 18, 995-1012.

Leahy, D. and J.P. Neary, 2007, ‘’Absorptive Capacity, R&D Spillovers, and Public Policy’’, International Journal of Industrial Organization, 25, 1089-1108.

Mansouri, F. and S. Ben Youssef, 2000, ‘’Regulation and Coordination of International Environmental Externalities with Incomplete Information and Costly Public Funds’’, Journal of Public Economic Theory, 2, 365-388.

Milliou, C, 2009, ‘’Endogenous Protection of R&D Investments’’, Canadian Journal of Economics, 42, 184-205.

Poyago-Theotoky, J, 1999, ‘’A Note on Endogenous Spillovers in a Non-Tournament R&D Duopoly’’, Review of Industrial Organization, 15, 253-262.

Takarada, Y, 2005, ‘’Transboundary Pollution and the Welfare Effects of Technology Transfer’’, Journal of Economics, 85, 251-275.

Zagonari, F, 1998, ‘’International Pollution Problems: Unilateral Initiatives by Environmental Groups in One Country’’, Journal of Environmental Economics and Management, 36, 46-69.