EMISSION TAXES, CLEAN TECHNOLOGY COOPERATION, AND PRODUCT MARKET COLLUSION: EXPERIMENTAL EVIDENCE. (25th March 2018)

• Record Type: Journal Article
• Authors: Yong, Soo Keong; Friesen, Lana; McDonald, Stuart
• Is Part Of: Economic inquiry. Volume 56:Number 4(2018)
• Page Start: 1950
• Page End: 1979
• Publication Date: 2018-03-25
• Subjects: Economics -- Periodicals; 330.05
• DOI: 10.1111/ecin.12573
• Languages: English
• ISSNs: 0095-2583

Abstract

Abstract : We use a laboratory experiment to study the link between cooperative research and development (R&D) in clean technology and collusion in a downstream product market in the presence of a time‐consistent emissions tax. Such a tax creates additional interconnections between firms, in addition to the standard technological spillovers. Our results show a strong link between R&D cooperation and market collusion under symmetric R&D spillovers in a duopoly, but when the spillovers are asymmetric, R&D cooperation does not necessarily result in collusion. With symmetric spillovers, the link between R&D cooperation and collusion remains strong even in three‐ and four‐firm industries. ( JEL C90, L5, O30, Q55)