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International R&D formations and strategic environmental policy

Published online by Cambridge University Press:  01 June 2020

Takeshi Iida Open the ORCID record for Takeshi Iida [Opens in a new window]
Takeshi Iida*
Affiliation:
School of Global and Community Studies, University of Fukui, Fukui, Japan
*
*Corresponding author. E-mail: [email protected]
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Abstract

We examine relations between strategic environmental policy, international R&D cartels and research joint ventures (RJVs), using a third-country model with Cournot duopoly. We indicate that forming an R&D/RJV cartel reduces governments' incentives to extract rent from consumers in the third country. Contrary to conventional wisdom, we find that social welfare under R&D cartels with full information sharing, i.e., RJV cartels, cannot surpass that under R&D/RJV competition, whereas forming an R&D/RJV cartel works well for environmental investment. Among the policy implications, we show that governments can maximize global welfare by collectively determining whether to allow R&D/RJV cartels.

Keywords

environmental R&Dinternational research joint ventureR&D cartelstrategic environmental policy

JEL classification

D43: Oligopoly and Other Forms of Market Imperfection H23: Externalities • Redistributive Effects • Environmental Taxes and Subsidies F18: Trade and Environment L13: Oligopoly and Other Imperfect Markets L24: Contracting Out • Joint Ventures • Technology Licensing
Type
Research Article
Information
Environment and Development Economics , Volume 25 , Issue 5 , October 2020 , pp. 509 - 528
Copyright
Copyright © Cambridge University Press 2020

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