eprintid: 18333
rev_number: 14
eprint_status: archive
userid: 2744
dir: disk0/00/01/83/33
datestamp: 2015-03-02 07:52:10
lastmod: 2015-04-22 11:15:59
status_changed: 2015-03-02 07:52:10
type: workingPaper
metadata_visibility: show
creators_name: Heyen, Daniel
title: Strategic Conflicts on the Horizon: R&D Incentives for Environmental Technologies
subjects: 330
divisions: 181000
abstract: Technological innovation is a key strategy for tackling environmental problems. The required R&D expenditures however are substantial and fall on self-interested countries. Thus, the prospects of successful innovation critically depend on innovation incentives. This paper focuses on a specific mechanism for strategic distortions in this R&D game. In this mechanism, the outlook of future conflicts surrounding technology deployment directly impacts on the willingness to undertake R&D. Apart from free-riding, a different deployment conflict with distortive effects on innovation may occur: Low deployment costs and heterogeneous preferences might give rise to 'free-driving'. In this recently considered possibility (Weitzman 2012), the country with the highest preference for technology deployment, the free-driver, may dominate the deployment outcome to the detriment of others. The present paper develops a simple two stage model for analyzing how technology deployment conflicts, free-riding and free-driving, shape R&D incentives of two asymmetric countries. The framework gives rise to rich findings, underpinning the narrative that future deployment conflicts pull forward to the R&D stage. While the outlook of free-riding unambiguously weakens innovation incentives, the findings for free-driving are more complex, including the possibility of super-optimal R&D and incentives for counter-R&D.
date: 2015-02
id_scheme: DOI
id_number: 10.11588/heidok.00018333
schriftenreihe_cluster_id: sr-3
schriftenreihe_order: 0584
ppn_swb: 1655541137
own_urn: urn:nbn:de:bsz:16-heidok-183337
language: eng
bibsort: HEYENDANIESTRATEGICC201502
full_text_status: public
series: Discussion Paper Series, University of Heidelberg, Department of Economics
volume: 0584
place_of_pub: Heidelberg
pages: 26
citation:   Heyen, Daniel  (2015) Strategic Conflicts on the Horizon: R&D Incentives for Environmental Technologies.  [Working paper]     
document_url: https://archiv.ub.uni-heidelberg.de/volltextserver/18333/1/dp584.pdf