Environmental Tax Policy and R&D Innovation Networks

15 Pages Posted: 28 Mar 2019

See all articles by Pascal Billand

Pascal Billand

Jean Monnet University

Christophe Bravard

Jean Monnet University, Saint-Etienne - CREUSET

Kenneth Ky

Universite Grenoble-Alpes

Sudipta Sarangi

Virginia Polytechnic Institute & State University

Date Written: February 1, 2019

Abstract

We examine the role of an environmental tax on R&D collaboration networks between firms in the context of developing cleaner production processes. First, we show that three types of innovation networks can emerge in equilibrium. Then, we examine the relationship between the environmental tax and the incentives for firms to add more collaborative links. We show that an increase in the environmental tax does not always incentivize firms to increase the number of R&D collaborations. Finally, we examine the optimal tax that the public authorities should set in order to maximize the social welfare. Given tractability issues, for this problem, we restrict our attention to the case of three firms. We establish that the optimal environmental tax depends on the cost of link formation. The higher the cost of link formation, the lower is the environmental tax. Similarly, we observe that the optimal environmental tax increases with the number of links that an efficient network contains.

Keywords: Interfirm collaborations, Pairwise equilibrium networks, Tax policy

JEL Classification: C70, L13, L20

Suggested Citation

Billand, Pascal and Bravard, Christophe and Ky, Kenneth and Sarangi, Sudipta, Environmental Tax Policy and R&D Innovation Networks (February 1, 2019). Available at SSRN: https://ssrn.com/abstract=3347209 or http://dx.doi.org/10.2139/ssrn.3347209

Pascal Billand

Jean Monnet University ( email )

34, rue Francis Baulier
Saint-Etienne, 42023
France

Christophe Bravard

Jean Monnet University, Saint-Etienne - CREUSET ( email )

34, rue Francis Baulier
Saint-Etienne, 42023
France

Kenneth Ky

Universite Grenoble-Alpes

Sudipta Sarangi (Contact Author)

Virginia Polytechnic Institute & State University ( email )

250 Drillfield Drive
Blacksburg, VA 24061
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
18
Abstract Views
242
PlumX Metrics