Journal article
A One-Stage Model of Abatement Innovation in Cournot Duopoly: Emissions vs Performance Standards
Environmental modeling & assessment, Vol.28(5), pp.875-891
10/2023
DOI: 10.1007/s10666-023-09891-4
Abstract
This paper evaluates the comparative performance of emission and performance standards in a one-stage game of abatement R&D and Cournot duopoly, in terms of R&D propensity, output and social welfare. For each standard, firms simultaneously select R&D and output levels, given the standard's exogenous constraint. A performance standard generates higher R&D investments and output, but lower profit, than the pollution-equivalent emissions standard. The same conclusion extends to social welfare only under high demand. We also conduct a similar comparison for each of the two instruments across the one-stage and the two-stage models. The two-stage model leads to higher levels of R&D and industry output for both standards. The same conclusion applies to the social welfare comparison for the emissions standard. However, for the performance standard, the same conclusion requires a damage parameter below a given threshhold. When the standards are chosen to maximize welfare, the performance comparison becomes highly parameter-dependent, except that social welfare is higher for the performance standard. Some policy implications are discussed.
Details
- Title: Subtitle
- A One-Stage Model of Abatement Innovation in Cournot Duopoly: Emissions vs Performance Standards
- Creators
- Rabah Amir - University of IowaAdriana Gama - College of MexicoRim Lahmandi-Ayed - University of CarthageKatarzyna Werner - Manchester Metropolitan University
- Resource Type
- Journal article
- Publication Details
- Environmental modeling & assessment, Vol.28(5), pp.875-891
- Publisher
- Springer Nature
- DOI
- 10.1007/s10666-023-09891-4
- ISSN
- 1420-2026
- eISSN
- 1573-2967
- Number of pages
- 17
- Language
- English
- Electronic publication date
- 04/20/2023
- Date published
- 10/2023
- Academic Unit
- Economics
- Record Identifier
- 9984401994402771
Metrics
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