Strategic selection between technology spillover and green technology cross-licencing under cap-and-trade policy

Abstract

ABSTRACT This paper examines the co-opetition strategic selection between two rival manufacturers under a cap-and-trade policy. Based on the classical Cournot game and Nash bargaining game theories, we propose a benchmark model with technology spillover effect and green technology cross-licencing models with both fixed-fee and mixed-fee modes. The results show that manufacturers have the highest outputs in the fixed-fee cross-licencing scenario, and manufacturers’ total profits in the green technology cross-licencing scenarios always outperform that in the technology spillover scenario. Moreover, when the unit carbon quota trading price is high, the technology spillover scenario has the lowest emissions. When the unit cost of governing carbon emissions-related pollution is low, social welfare in the fixed-fee cross-licencing scenario is higher than that in the mixed-fee cross-licencing scenario. Interestingly, the social welfare advantage of the mixed-fee cross-licencing scenario becomes more and more prominent as the unit cost in governing carbon emissions related pollution increases.