We modify the vertically differentiated duopoly model by André et al. (2009) replacing Bertrand with Cournot behaviour, and we characterise the region wherein a Porter-type result takes place. We show that the Porter hypothesis applies in an equilibrium taking always the form of a prisoner's dilemma. Moreover, whenever the asymmetry in the cost parameters between green and brown technology is not too high, a class of equilibria emerges wherein firms converge spontaneously onto the green standard as a result of dominant strategies, any environmental regulation being altogether absent.
Vertical differentiation in a Cournot industry: The Porter hypothesis and beyond / Lambertini, Luca; Tampieri, Alessandro. - In: RESOURCE AND ENERGY ECONOMICS. - ISSN 0928-7655. - STAMPA. - 34:(2012), pp. 374-380. [10.1016/j.reseneeco.2012.03.001]
Vertical differentiation in a Cournot industry: The Porter hypothesis and beyond
TAMPIERI, ALESSANDRO
2012
Abstract
We modify the vertically differentiated duopoly model by André et al. (2009) replacing Bertrand with Cournot behaviour, and we characterise the region wherein a Porter-type result takes place. We show that the Porter hypothesis applies in an equilibrium taking always the form of a prisoner's dilemma. Moreover, whenever the asymmetry in the cost parameters between green and brown technology is not too high, a class of equilibria emerges wherein firms converge spontaneously onto the green standard as a result of dominant strategies, any environmental regulation being altogether absent.File | Dimensione | Formato | |
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