A dynamic analysis of corporate investments and emission tax policy in an oligopoly market with network externality

We investigate the product innovation, green R&D investments and the emission tax policy in an oligopoly market with network externality. It is shown that an appropriate tax policy should be deployed to effectively control pollution and motivate innovation. At the early stage of the market, the emission tax should gradually reduce to motivate firms to achieve optimal investments. Later at the mature stage, the emission tax policy should carefully consider both the market competition and green technology levels. (c) 2020 Elsevier B.V. All rights reserved.

Automated summary

In an oligopoly market with network externality, product innovation and green R&D investments can be incentivized through emission tax policy. The tax should gradually decrease in the early stage to motivate optimal investments, and carefully consider market competition and green technology levels in the mature stage.