Transboundary Pollution, R&D Spillovers, Absorptive Capacity and International Trade

Authors

  • Zeineb Aloui Dinar Faculté des Sciences Economiques et de Gestion de Tunis, Université de Tunis El Manar

Abstract

In this paper, we study the effects of absorptive capacity and R&D spillovers on cross-border pollution in a game played by two regulator-firm hierarchies. By means of a tax per-unit of pollution, a subsidy per-unit of original research and a subsidy per-unit of absorptive research, the regulators can reach the first-best outcome. We show that, in addition to free R&D spillovers and absorptive research, competition of firms on the common market help non-cooperating countries to better internalize transboundary pollution. More importantly, opening borders increase the per-unit emission-tax and decrease the per-unit original research subsidy. Thus, when the investment-cost parameters are sufficiently high, the international trade increases the original research, production. Consequently, the emission ratio is lower. Keywords: Transboundary pollution; R&D spillovers; absorptive capacity; international trade. JEL Classifications: D62; H21; O32.

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Author Biography

Zeineb Aloui Dinar, Faculté des Sciences Economiques et de Gestion de Tunis, Université de Tunis El Manar

Etudiente en Methodes Quantitatives

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Published

2014-06-03

How to Cite

Dinar, Z. A. (2014). Transboundary Pollution, R&D Spillovers, Absorptive Capacity and International Trade. International Journal of Economics and Financial Issues, 4(3), 501–513. Retrieved from https://econjournals.com.tr/index.php/ijefi/article/view/813

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