Work

Profiting From Regulation: The Effects of Emissions Standards on Abatement R&D

Year: 2025

Type: article

Abstract: ABSTRACT This paper explores the impact of emissions standards on a firm's output and abatement R&D investment decisions in a duopoly model, extending the work of Amir et al. (2023). It is shown that high upper limits on total emissions remove the firms' incentives to invest in abatement R&D. This helps firms to coordinate on profit‐increasing output levels relative to unregulated markets. Moreover, subsidies for abatement R&D may hurt firms, but improve welfare when the regulation is strict enough.

Source: Journal of Public Economic Theory

DOI: 10.1111/jpet.70055

Authors: Johanna‐Sophia Hardt, Heidrun Hoppe‐Wewetzer, Felix B. Klapper

Institution: Leibniz University Hannover

Language: English

Topic: Climate Change Policy and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $3,350