Diffusion of abatement technologies in a differentiated industry

This paper studies the timing pattern of adoption of green technologies in a differentiated oligopolistic industry. A firm, faced with an emission tax, has incentive to buy the new technology that reduces its per-unit ofoutput emíssions in order to gain market share from its rivals. It is shown that the adoption pattem depends on the level of emission tax, the type of product market competition, the degree of product differentiation, and a1so on th~ ability of firms to pre-cornmit, or not, to a certain adoption date. The last adoption is a1ways earlier under Coumot competition than under Bertrand in both the pre-cornmitment and the pre-emptive equilibria. Also, in a precommitment equilibrium the first adoption under Bertrand is earlier than under Coumot but only if the goods are sufficientIy c10se substitutes. However, in a pre-emptive equilibrium the first adoption under Bertrand is a1ways earlier than under Coumot. Finally, comparative static results with respect to the level of emíssion tax are presented