Work

Green patents in an oligopolistic market with green consumers

Year: 2026

Type: article

Abstract: We analyze the impact of patent policies and emission taxes on green innovation. We allow for strategic interactions of firms in a duopolistic market in the presence of green-conscious consumers. We identify a paradoxical effect of increasing emission taxes beyond a certain threshold, which results in an increase in emissions. Decreasing patenting costs mitigates this paradox while the impact of tightening patentability requirements is more complex. Moreover, we show that the greater the proportion of green-conscious consumers, the less likely firms are totcilate license a green patent, which results in higher emissions levels at low tax levels. For an intermediate range of taxes, licensing does occur in equilibrium which lowers emissions. Finally, we find that while tax increases lead to a switch from overinvestment to underinvestment in the absence of green-conscious consumers, when the proportion of green-conscious consumers is sufficiently large, there is underinvestment at all tax levels.

Source: Journal of Environmental Economics and Management

DOI: 10.1016/j.jeem.2026.103281

Authors: Corinne Langinier, Amrita RayChaudhuri

Institutions: University of Alberta, Tilburg University, The University of Winnipeg

Language: English

Topic: Environmental Sustainability in Business

Subfield: Marketing

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Responsible consumption and production, Climate action

Open Access status: hybrid

Estimated APC paid: $3,620