TY - JOUR
T1 - Managerial Delegation Contracts, "Green" R&D and Emissions Taxation
AU - Poyago-Theotoky, Joanna
AU - Yong, Soo Keong
N1 - Publisher Copyright:
© 2019 Walter de Gruyter GmbH, Berlin/Boston.
PY - 2019
Y1 - 2019
N2 - We introduce an explicit environmental incentive into a managerial compensation contract in the context of a Cournot duopoly with pollution externalities under an emissions tax regime. We show that, depending on the effectiveness of "green" R&D, compared to a standard sales compensation contract, the explicit environmental focused contract results in more abatement. As a consequence, the regulator sets a lower emissions tax, and social welfare is higher. Moreover, in general, firm owners earn higher profits when adopting the environmental delegation contract.
AB - We introduce an explicit environmental incentive into a managerial compensation contract in the context of a Cournot duopoly with pollution externalities under an emissions tax regime. We show that, depending on the effectiveness of "green" R&D, compared to a standard sales compensation contract, the explicit environmental focused contract results in more abatement. As a consequence, the regulator sets a lower emissions tax, and social welfare is higher. Moreover, in general, firm owners earn higher profits when adopting the environmental delegation contract.
KW - "green" R&D
KW - abatement
KW - cournot duopoly
KW - emissions tax
KW - managerial delegation
UR - http://www.scopus.com/inward/record.url?scp=85058785836&partnerID=8YFLogxK
U2 - 10.1515/bejte-2017-0128
DO - 10.1515/bejte-2017-0128
M3 - Article
AN - SCOPUS:85058785836
SN - 1935-1704
VL - 19
JO - B.E. Journal of Theoretical Economics
JF - B.E. Journal of Theoretical Economics
IS - 2
M1 - 20170128
ER -