Munich Personal RePEc Archive

Environmental Regulation and Choice of Innovation in Oligopoly

Iwata, Hiroki (2016): Environmental Regulation and Choice of Innovation in Oligopoly.

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Abstract

This study investigates the effect of an environmental regulation on the innovation choice of firms in an oligopoly. Most existing studies on environmental regulations and innovations examine the optimal behavior of firms when one innovation project is feasible. In our model, firms are allowed to choose from multiple types of innovation projects. Our main contributions are that we derive the conditions under which environmentally friendly and cost reducing innovations are selected in Bertrand competition and we show how environmental regulation affects innovation choice.

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