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Cross‐ownership and environmental R&D risk choices in a differentiated duopoly

LI Dong-dong et al.

International Journal of Economic Theory2025https://doi.org/10.1111/ijet.70005article
AJG 2ABDC B
Weight
0.41

Abstract

This paper develops a differentiated duopoly model to investigate the optimal environmental R&D (ER&D) risk choices of firms with cross‐ownership under an emission tax. The results show that when firms hold shares in each other, cross‐ownership incentivizes firms to undertake greater ER&D risks. The private incentive for ER&D risk is lower than the social incentive when the emission tax rate is low relative to the marginal environmental damage. However, a higher share of cross‐ownership can bring the private optimum closer to the social optimum under certain conditions. We also find that under unilateral shareholding, a firm partially owned by its rival assumes higher ER&D risk than the firm owning its shares, but both take on less risk than under cross‐ownership. Finally, we show that ER&D risk is higher under Bertrand competition than under Cournot competition.

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https://doi.org/https://doi.org/10.1111/ijet.70005

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@article{li2025,
  title        = {{Cross‐ownership and environmental R&D risk choices in a differentiated duopoly}},
  author       = {LI Dong-dong et al.},
  journal      = {International Journal of Economic Theory},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1111/ijet.70005},
}

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Cross‐ownership and environmental R&D risk choices in a differentiated duopoly

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Evidence weight

0.41

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.25 × 0.4 = 0.10
M · momentum0.55 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.