The established view on oligopolistic competition with environmental externalities has it that, since firms neglect the external effect, their incentive to invest in R&D for pollution abatement is nil unless they are subject to some form of environmental taxation. We take a dynamic approach to...

We examine the impact of an optimal emissions tax on research and development of emission reducing green technology (E-R&D) in the presence of R&D spillovers. We show that the size and eectiveness of the optimal emissions tax depends on the type of the R&D spillover: input or output spillover....

Acquired wisdom has it that the allocation of pollution rights to firms hinders their willingness to undertake uncertain R&D projects for environmental-friendly technologies. We revisit this issue in a model where firms strategically choose whether to participate in a lottery to attain pollution...