R&D Cooperation, Innovation Spillovers and Firm Location in a Model of Environmental Policy

Fondazione Eni Enrico Mattei Working Paper No. 23.98

16 Pages Posted: 24 Sep 1998

See all articles by Carlo Carraro

Carlo Carraro

Ca' Foscari University of Venice; CMCC - Euro Mediterranean Centre for Climate Change (Climate Policy Division); IPCC; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Centre for European Policy Studies, Brussels; Green Growth Knowledge Platform

Antoine Soubeyran

University of Angers - Research Group in Quantitative Saving (GREQAM)

Date Written: November 1997

Abstract

In this paper, the reaction of firms to the introduction of environmental charges in a given industry is analyzed. Firms may decide either to relocate their plants abroad or to adopt a new environmental-friendly technology. The latter can be either developed by investing in R&D or obtained by buying a licence. We show that, even if domestic firms share the same initial technology, at the equilibrium they make different choices in response to the same environmental policy. Some firms decide to cooperate in carrying out environmental R&D, other firms re-locate their plants abroad, and a third group decides to innovate through imitation. The size of the three groups can be affected by the government's industrial, trade and environmental policies.

JEL Classification: L51, Q28, Q38

Suggested Citation

Carraro, Carlo and Soubeyran, Antoine, R&D Cooperation, Innovation Spillovers and Firm Location in a Model of Environmental Policy (November 1997). Fondazione Eni Enrico Mattei Working Paper No. 23.98, Available at SSRN: https://ssrn.com/abstract=128471 or http://dx.doi.org/10.2139/ssrn.128471

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