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Article

Green Innovation and Competition: R&D Incentives in a Circular Economy

1
Department of Economics and Statistics, University of Salerno, Via Giovanni Paolo II, 132, I-84084 Fisciano, Italy
2
Department of Economics and Statistics and CSEF, University of Naples Federico II, Via Cintia, Monte S. Angelo, I-80126 Napoli, Italy
3
Faculty of Actuarial Science and Insurance, Bayes Business School, City University, 106 Bunhill Row, London EC1Y 8TZ, UK
*
Author to whom correspondence should be addressed.
Academic Editors: Ulrich Berger and Alessandro Tavoni
Received: 18 June 2021 / Revised: 7 September 2021 / Accepted: 8 September 2021 / Published: 16 September 2021
(This article belongs to the Special Issue Cooperation, Innovation and Safeguarding of the Environment)
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. View Full-Text
Keywords: circular economy; cournot oligopoly; R&D investment spillovers; green innovation circular economy; cournot oligopoly; R&D investment spillovers; green innovation
MDPI and ACS Style

Bimonte, G.; Romano, M.G.; Russolillo, M. Green Innovation and Competition: R&D Incentives in a Circular Economy. Games 2021, 12, 68. https://0-doi-org.brum.beds.ac.uk/10.3390/g12030068

AMA Style

Bimonte G, Romano MG, Russolillo M. Green Innovation and Competition: R&D Incentives in a Circular Economy. Games. 2021; 12(3):68. https://0-doi-org.brum.beds.ac.uk/10.3390/g12030068

Chicago/Turabian Style

Bimonte, Giovanna, Maria G. Romano, and Maria Russolillo. 2021. "Green Innovation and Competition: R&D Incentives in a Circular Economy" Games 12, no. 3: 68. https://0-doi-org.brum.beds.ac.uk/10.3390/g12030068

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