Environmental and Resource Economics

, Volume 72, Issue 2, pp 477–500 | Cite as

Emission Reduction Technology Licensing and Diffusion Under Command-and-Control Regulation

  • Haiyang XiaEmail author
  • Tijun Fan
  • Xiangyun Chang


In this paper, we discuss a patented emission reduction technology that a monopolistic upstream eco-industry licenses to the polluting firms in a downstream oligopolistic industry, which is subject to command-and-control regulation. We explicitly model the interaction between the outside innovator and the polluting firms, using a non-cooperative game-theoretical framework. We find that full and partial diffusion can both occur in equilibrium, depending on the relationship between environmental regulation stringency and cleanliness improvement of the new technology. Furthermore, we study the impacts of environmental regulation stringency and the improvement in cleanliness on the adoption and the diffusion of the emission reduction technology.


Clean technology diffusion Command-and-control regulation Eco-industry Emission reduction technology Technology licensing 



We are grateful to Co-Editor and three anonymous referees, whose comments greatly improved the paper. The authors also acknowledge financial support from the National Natural Science Foundation of China (71202052, 71431004, 71573087, 71473085), Program for New Century Excellent Talents in University (NCET-11-0637), Humanities and Social Science Youth Foundation of the Ministry of Education of China (12YJC630240) and the Fundamental Research Funds for the Central Universities.


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© Springer Science+Business Media B.V., part of Springer Nature 2017

Authors and Affiliations

  1. 1.School of Business, East China University of Science and TechnologyShanghaiChina

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