Prague Economic Papers 2004, 13(1):67-81 | DOI: 10.18267/j.pep.232

Technology and Antitrust Policies in a Polluting Industry

Joel Sandonís, Petr Mariel
Universidad del País Vasco, Facultad de Ciencias Económicas, Lehendakari Aguirre 83, E 48015 Bilbao, Spain (e-mail: jepsadij@bs.ehu.es; etpmaxxp@bs.ehu.es).

We compare different combinations of technology and antitrust policies from a social welfare point of view in a non-tournament model of cost reducing R&D with spillovers, for the case of a homogeneous goods duopoly, where production produces pollution as a by-product, firms face an exogenous emissions tax and can also invest in abatement technologies. We show that for sufficiently polluting industries facing a loose environmental policy, cooperative R&D is not always welfare improving; a policy of subsidizing cooperative R&D is always welfare improving; allowing for mergers may be socially desirable; not regulating the industry at all may be welfare superior to a policy consisting of forbidding market collusion and subsidizing cooperative R&D.

Keywords: technology policy, antitrust, R&D cooperation, pollution
JEL classification: L40, L50, Q28

Published: January 1, 2004  Show citation

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Sandonís, J., & Mariel, P. (2004). Technology and Antitrust Policies in a Polluting Industry. Prague Economic Papers, 13(1), 67-81. doi: 10.18267/j.pep.232
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