Strategic Behavior and the Environment > Vol 2 > Issue 2

Clean Technology Adoption Under Cournot Competition

María-Eugenia Sanin, Université Montpellier 1, UMR5474 LAMETA, and Ecole Polytechnique, France, maria-eugenia.sanin@polytechnique.edu Skerdilajda Zanaj, CREA, University of Luxembourg, France, skerdilajda.zanaj@uni.lu
 
Suggested Citation
María-Eugenia Sanin and Skerdilajda Zanaj (2012), "Clean Technology Adoption Under Cournot Competition", Strategic Behavior and the Environment: Vol. 2: No. 2, pp 159-172. http://dx.doi.org/10.1561/102.00000013

Published: 30 Jul 2012
© 2012 M.-E. Sanin and S. Zanaj
 
Subjects
Innovation,  Technology,  Trade
 
Keywords
D43L13Q55
Environmental innovationTradable emission permitsInteraction à la Cournot
 

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In this article:
Introduction
The Model
Equilibria Analysis
Concluding Remarks
Appendix A. Positivity of Profits
Appendix B. Non Existence of Fee
References

Abstract

In this paper we assess incentives for clean technology adoption by firms that compete à la Cournot in local product markets subject to a tradable emission permits regulation. Sanin and Zanaj (2011) show that permit prices may increase after clean technology adoption. Herein we show that, since strategic firms are able to predict such increase, this results in a non-innovation equilibrium (even for very low adoption costs). To the light of the previous result, we find a sufficient condition for the cap on emissions to ensure positive innovation incentives.

DOI:10.1561/102.00000013