Carbon tax in a duopoly with asymmetric spillovers and symmetric contributions

Abstract

This study constructs a polluting duopoly model characterized by asymmetric environmental research and development (R&D) spillovers with symmetric abatement technology contributions. The study investigates, in the context of environmental regulation, the effects and implications of R&D efficiencies, R&D organizations, and information-sharing schemes on this featured economy's economic and environmental equilibriums. In particular, we (i) compare R&D and profit among the regimes of R&D noncooperation, R&D cooperation, and symmetric research joint venture cartelization; (ii) evaluate the regimes' R&D, emissions, profit, and welfare; and (iii) analyze how R&D efficiencies, spillover asymmetries, and spillover magnitude affect the regimes' economic–environmental performance. Furthermore, we validate the symmetric research joint venture cartelization regarding the symmetric contributions and examine the strategic interaction of R&D among regimes. Fundamentally, this study provides practical insights into the optimal environmental technology policy mix design under a unified analysis framework for government, enterprises, and consumers.