Yasunori Ouchida

The primary focus of this paper is to examine the link between environmental R&D formation and the strategic use or non‐use of a government's ability to precommit to an emissions tax rate. The existing literature implicitly omits this important matter. This paper comprehensively evaluates various regulatory contexts separated by the timing of emissions taxation and by environmental R&D formations in a Cournot duopoly. The following three points are revealed. First, an equilibrium occurs in which the government does not strategically use its emissions tax rate precommitment ability to enhance social efficiency. Second, if the efficiency of environmental R&D costs is high and if environmental damage is serious, then the government should precommit to an emissions tax rate and allow for the cartelization of the two firms' environmental R&D. However, if the environmental R&D cost efficiency and environmental damage are both low, then the government should adopt a time‐consistent emissions tax and allow for the cartelization of the two firms' environmental R&D. Third, when the two firms can form an environmental research joint venture (ERJV), ERJV cartelization should be invariably allowed, even if the government is a strategic non‐user of its precommitment ability.

We combine a model of product research and development (R&D) and technological spillover with the concept of technological distance and examine horizontal mergers in a duopolistic market with R&D. The results are fourfold. First, a merger can better encourage R&D investment than the competition case. Second, with a small degree of product differentiation (PD), the merger criterion under the Cournot duopoly is stricter than that of the Bertrand case. By contrast, with a moderate or large degree of PD, the opposite is true. Third, with a small technological distance, a merger should be allowable. Finally, with a small degree of PD and moderate technological distance, a merger should be allowable.

This article presents an examination of a linear bilateral monopoly model with endogenous and cooperative choice of corporate social responsibility (CSR) level. This article also describes an investigation of the effects of cooperative choice of CSR on the market and welfare. New findings are explicit derivation of the necessary and sufficient condition for solving a double marginalization problem in the bilateral monopoly model with CSR. In addition, this report is the first demonstrating that cooperative CSR with Nash bargaining improves consumer surplus, social welfare and each firm’s profit to a level higher than that achieved through noncooperative CSR. Furthermore, cooperative CSR with Nash bargaining is shown to be capable of completely solving the double marginalization problem generated by a bilateral monopoly, although the manufacturer and the retailer are not vertically integrated.

This study examines the environmental R&D (E-R&D) of Cournot duopolists with end-of-pipe technology under a regulator’s precommitment to an emissions tax. Under technological spillover effect, the government invariably prefers E-R&D cartelization to E-R&D competition. Highly contrary to earlier studies, consumer surplus is not necessarily maximized by environmental research joint venture cartelization, although this offers private and social incentives.