This paper presents an examination of the socially desirable formation of environmental R&D in Cournot duopoly in a setting where a regulator has no precommitment ability for an emissions tax. The results reveal that if environmental damage is sufficiently small, alternatively if there is severe environmental damage and large inefficiency in environmental R&D costs, then environmental research joint venture (ERJV) cartelization is socially desirable. However, if environmental damage is sufficiently extensive, and if a firm's environmental R&D costs are sufficiently limited, then, in contrast to previous studies, environmental R&D competition is socially more desirable than environmental R&D cartelization and ERJV cartelization, although R&D competition is the case of “NO information sharing" and “NO R&D coordination."
Environmental research joint venture
Environmental R&D
Time-consistent emission tax
Competition policy
Cournot duopoly