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

Zeineb Dinar
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Zeineb Dinar: University of Tunis el Manar, FSEGT and LAREQUAD Campus Universitaire, El Manar II, Tunis 2092, Tunisia

International Journal of Economics and Financial Issues, 2014, vol. 4, issue 3, 501-513

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 -unitemission- tax and decrease the per-unit original research subsidy. Thus, when the investment-costparameters 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 (search for similar items in EconPapers)
JEL-codes: D62 H21 O32 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ1:2014-03-6

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