Green Innovation and Competition: R&D Incentives in a Circular Economy
The present paper provides theoretical insights regarding the determinants of firms’ incentives to invest in a Circular Economy. The analysis relies on a Cournot model disaggregating the disposal cost in the production function. In a non-simultaneous sequential game, two risk-neutral firms are endow...
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doaj-5bff6ea722174227909f58dd03b808132021-09-26T00:11:54ZengMDPI AGGames2073-43362021-09-0112686810.3390/g12030068Green Innovation and Competition: R&D Incentives in a Circular EconomyGiovanna Bimonte0Maria Grazia Romano1Maria Russolillo2Department of Economics and Statistics, University of Salerno, Via Giovanni Paolo II, 132, I-84084 Fisciano, ItalyDepartment of Economics and Statistics, University of Salerno, Via Giovanni Paolo II, 132, I-84084 Fisciano, ItalyDepartment of Economics and Statistics, University of Salerno, Via Giovanni Paolo II, 132, I-84084 Fisciano, ItalyThe present paper provides theoretical insights regarding the determinants of firms’ incentives to invest in a Circular Economy. The analysis relies on a Cournot model disaggregating the disposal cost in the production function. In a non-simultaneous sequential game, two risk-neutral firms are endowed with a green innovation project that, if successful, would reduce the overall production costs and implement a Circular Economy. Firms are plagued by asymmetric information about the exact value of the other firm’s innovation. In this setting, the R&D investment in a Circular Economy, by affecting the distribution of production and disposal costs, influences the production decisions of both the innovating and the rival firms. The sign of the impact depends on the firms’ strategy in the product market. Furthermore, the analysis points out that cooperation in R&D of firms competing in the product market reinforces incentives to invest in green innovation. This suggests that governments aimed to advance a Circular Economy should encourage firms’ cooperation.https://www.mdpi.com/2073-4336/12/3/68circular economycournot oligopolyR&D investment spilloversgreen innovation |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Giovanna Bimonte Maria Grazia Romano Maria Russolillo |
spellingShingle |
Giovanna Bimonte Maria Grazia Romano Maria Russolillo Green Innovation and Competition: R&D Incentives in a Circular Economy Games circular economy cournot oligopoly R&D investment spillovers green innovation |
author_facet |
Giovanna Bimonte Maria Grazia Romano Maria Russolillo |
author_sort |
Giovanna Bimonte |
title |
Green Innovation and Competition: R&D Incentives in a Circular Economy |
title_short |
Green Innovation and Competition: R&D Incentives in a Circular Economy |
title_full |
Green Innovation and Competition: R&D Incentives in a Circular Economy |
title_fullStr |
Green Innovation and Competition: R&D Incentives in a Circular Economy |
title_full_unstemmed |
Green Innovation and Competition: R&D Incentives in a Circular Economy |
title_sort |
green innovation and competition: r&d incentives in a circular economy |
publisher |
MDPI AG |
series |
Games |
issn |
2073-4336 |
publishDate |
2021-09-01 |
description |
The present paper provides theoretical insights regarding the determinants of firms’ incentives to invest in a Circular Economy. The analysis relies on a Cournot model disaggregating the disposal cost in the production function. In a non-simultaneous sequential game, two risk-neutral firms are endowed with a green innovation project that, if successful, would reduce the overall production costs and implement a Circular Economy. Firms are plagued by asymmetric information about the exact value of the other firm’s innovation. In this setting, the R&D investment in a Circular Economy, by affecting the distribution of production and disposal costs, influences the production decisions of both the innovating and the rival firms. The sign of the impact depends on the firms’ strategy in the product market. Furthermore, the analysis points out that cooperation in R&D of firms competing in the product market reinforces incentives to invest in green innovation. This suggests that governments aimed to advance a Circular Economy should encourage firms’ cooperation. |
topic |
circular economy cournot oligopoly R&D investment spillovers green innovation |
url |
https://www.mdpi.com/2073-4336/12/3/68 |
work_keys_str_mv |
AT giovannabimonte greeninnovationandcompetitionrdincentivesinacirculareconomy AT mariagraziaromano greeninnovationandcompetitionrdincentivesinacirculareconomy AT mariarussolillo greeninnovationandcompetitionrdincentivesinacirculareconomy |
_version_ |
1717366755749265408 |