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R&D Subsidies versus R&D Cooperation in a Duopoly with Spillovers and Pollution
Australian Economic Papers (2002)
  • Emmanuel Petrakis, University of Crete
  • Joanna Poyago-Theotoky, Loughborough University
Abstract

We introduce pollution, as a by-product of production, into a non-tournament model of R&D with spillovers. Technology policy takes the form of either R&D subsidisation or pre-competitive R&D cooperation. We show that, when the emissions tax is exogenous, the optimal R&D subsidy can be negative, i.e. there should be a tax on R&D, depending on the extent of the appropriability problem and the degree of environmental damage. In a wide class of cases, depending on the parameter values, welfare in the case of R&D cooperation, is lower than welfare in the case of R&D subsidisation.

Publication Date
2002
Citation Information
Emmanuel Petrakis and Joanna Poyago-Theotoky. "R&D Subsidies versus R&D Cooperation in a Duopoly with Spillovers and Pollution" Australian Economic Papers Vol. 41 Iss. 1 (2002)
Available at: http://works.bepress.com/joanna_poyago_theotoky/18/