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- Publisher
- Springer Journals
- Copyright
- Copyright © 2019 by Springer Science+Business Media, LLC, part of Springer Nature
- Subject
- Economics; Industrial Organization; Economic Policy; R & D/Technology Policy; European Integration; Microeconomics; International Economics
- ISSN
- 1566-1679
- eISSN
- 1573-7012
- DOI
- 10.1007/s10842-019-00292-6
- Publisher site
- See Article on Publisher Site
Abstract
We consider a sequential-move game in which a polluting monopolist chooses whether to acquire a green technology, and a potential entrant responds deciding whether to join the market and, upon entry, whether to invest in clean technology. Our paper compares two models: one in which environmental regulation is strategically set before firms’ decisions; and another where regulation is selected after firms’ entry and investment decisions. We show that a proactive regulation that strategically anticipates firms’ behavior can implement different market structures. In particular, policy makers can choose emission fees to induce competition and/or investment in clean technology, giving rise to market structures that maximize social welfare.
Journal
"Journal of Industry, Competition and Trade" – Springer Journals
Published: Jan 30, 2019