Journal article
Being green first: Simultaneous vs. sequential abatement decisions
Economics letters, Vol.227
06/2023
Handle:
https://hdl.handle.net/2376/120266
Abstract
We investigate the effect of the timing of green technology investment in a polluting duopoly facing environmental regulation. We consider a three-stage game where (i) firms sequentially choose their investment in the first stage, (ii) the regulator sets the optimal emission fee in the second stage, and (iii) the polluting good is produced in the third stage. When free-riding incentives are strong the leader enjoys a first-mover advantage, investing less in abatement than the follower, as in sequential public good games. We also show that sequential investment decisions achieve higher abatement than simultaneous decisions, and identify in which settings such a difference is the largest.
•We investigate the effect of the timing of abatement investment in a polluting duopoly.•Firms face environmental regulation.•We study a three-stage game.•Strong free-riding incentives induce the leader to invest less in abatement (first-mover advantage).•We show that sequential investment decisions achieve higher abatement than simultaneous decisions.
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Details
- Title
- Being green first
- Creators
- John C. Strandholm - University of South Carolina UpstateAna Espinola-Arredondo - 111C Hulbert Hall, Washington State University, Pullman, WA 99164, United States of AmericaFelix Munoz-Garcia - 103H Hulbert Hall, Washington State University, Pullman, WA 99164, United States of America
- Publication Details
- Economics letters, Vol.227
- Academic Unit
- Economic Sciences, School of
- Publisher
- Elsevier B.V
- Identifiers
- 99900971337101842
- Language
- English
- Resource Type
- Journal article