Abstract
This paper examines the effects of partial passive ownership (PPO) on environmental research and development(ER&D), environmental quality, and social welfare in a polluting duopoly. To the best of our knowledge, this isthe first analysis to integrate PPO with strategic clean-technology ER&D, explicitly comparing exogenous andendogenous emission tax regimes and allowing for different degrees of information disclosure. We developa model in which firms can reduce emissions through ER&D investments in clean technologies, subject toeither exogenous or endogenous emission tax regimes, and with or without ER&D information sharing. Theanalysis shows that PPOs consistently reduce aggregate emissions, thereby improving environmental quality.Under exogenous taxation, PPOs increase total ER&D, while under endogenous taxation the effect dependson the severity of environmental damage and the degree of information disclosure. When environmentaldamage is low, PPOs either leave total ER&D unchanged or reduce welfare; when damage is high, PPOs mayenhance both ER&D and welfare, particularly when firms share ER&D information. The results highlight theneed for antitrust and environmental regulators to adopt context-specific approaches when assessing PPOs inhigh-polluting industries.
NETL
NSTL
Elsevier