Cournot competition and “green” innovation: An inverted-U relationship Academic Article uri icon


  • We evaluate the relationship between competition and innovation in an industry where production is polluting and R&D has the aim to reduce emissions. We build up an oligopoly model where n firms com- pete in quantities and decide their investment in green R&D. When environmental taxation is exogenous, the investment in green R&D always increases with the number of firms in the industry. We analyse next the case where taxation is endougenously determined by a regu- lator with the aim to maximise social welfare. An inverted-U rela- tionship exists under reasonable conditions, and it is driven by the presence of spillovers.

publication date

  • 2017

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