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Environmental regulation and technology transfers
Author(s) -
Asano Takao,
Matsushima Noriaki
Publication year - 2014
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/caje.12100
Subject(s) - license , technology transfer , environmental technology , duopoly , government (linguistics) , industrial organization , business , production (economics) , environmental tax , economics , international trade , international economics , public economics , market economy , welfare , microeconomics , tax reform , engineering , political science , linguistics , philosophy , law , waste management
This paper analyzes the situation in which a national government introduces environmental regulations. Within the framework of an international duopoly with environmental regulations, an environmental tax imposed by the government in the home country can induce a foreign firm with advanced abatement technology to license it to a domestic firm without this technology. Furthermore, when the domestic firm's production technology is less efficient than that of the foreign firm, the foreign firm may freely reveal its technology to the domestic firm. These improvements through the voluntary transfer of technology imply that environmental regulations have positive impacts on innovation.