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Journal of Economics

, Volume 126, Issue 1, pp 19–42 | Cite as

Apportioning indivisible damage and strategic diffusion of pollution abatement technology

Article
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Abstract

I examine the problem of apportioning liability among competing firms in an industry where the environmental damage is a joint product of the actions taken by all firms. In particular, I analyze the effect of alternative apportionment rules on adoption and strategic diffusion of pollution abatement technology. In a duopoly where industry wide technological diffusion is welfare enhancing, I characterize the second-best optimal apportionment rules. Inducing technology transfer requires placing a larger burden of the liability on the ex ante cleaner firm i.e., the one with a more efficient abatement technology.

Keywords

Strict liability Apportionment rule Technology diffusion Duopoly Environmental regulation 

JEL Classification:

D43 L1 Q58 

Notes

Acknowledgements

I would like to thank the editor and two anonymous referees for their insightful comments and suggestions.

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Copyright information

© Springer-Verlag GmbH Austria, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Wenlan School of BusinessZhongnan University of Economics and LawWuhanChina

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