Environmental research joint ventures and optimal emissions taxation

This paper performs a comparison of two well known approaches for modelling R&D spillovers associated with investment in E-R&D, namely dAspremont-Jacquemin and Kamien-Muller-Zang. We show that there is little qualitative difference between the models in terms of total surplus delivered when selecting the optimal tax regime when there is pre-commitment under cooperative regimes in which rms coordinate expenditures to maximize joint prots. However, under non-cooperative regimes there is marked dierence, with the model of Kamien-Muller-Zang leading to higher taxation rates when rms share information. Furthermore, we argue that the Kamien-Muller-Zang model is of questionable validitywhen modelling R&D on emissions reducing technology due to counter intuitive results showing a positive relationhip between R&D spillovers and emissions taxes.