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, , Skerdilajda Zanaj, CREA, University of Luxembourg, France,
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.

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


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


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.