"Green" innovation, privacy regulation and environmental policy. (February 2023) - Pan, Weihua
Abstract: We present a Hotelling duopoly and study the relationship between privacy regulation and environmental policy in an industry in which firms invest in "green" innovation (E-R&D) to reduce emissions in production. This research concludes that governments need to set emission taxes consistent with privacy regulations. With strong privacy protections, emission taxes should be higher than the case with no privacy protections. In the asymmetric case with poor privacy regulation, the optimal emission tax is highest to achieve emissions reductions. In addition, an economic trade-off can arise from the industry profits and E-R&D investment. With weak privacy regulation, the effort of E-R&D is highest, and corporatedo the least harm to the environment, while the industrial profits are lowest due to the massive tax burden. Finally, we suggest that policymakers should (i) combine reasonable emission tax policies and green finance for renewable energy projects, (ii) conduct weak privacy regulations on green finance and renewable energy projects, and (iii) encourage uniform pricing for renewable energy products from a competition policy perspective. Highlights: Based on a non-cooperative game-theoretic model, the relationship between privacy regulation and environmental policy. With privacy regulation, an economic trade-off can arise from the industry profits and E-R&D investment. Governments are advised to set emission taxes consistent with the privacy regulation. The direct and strategic, are found in the E-R&D investment and emissions taxes determination stages. The policymakers should (i) combine reasonable emission tax policies, conduct weak privacy regulations and encourage uniform pricing.