| dc.description.abstract | This thesis is to examine how the environment policy affects a duopoly model with vertical product differentiation. There are two producers in the market of a recyclable product in competition. One has a higher recycle rate than the other. The aim is to study how and on what key issues the producers choose between the optimal recycle rate and the optimal pollution reducing R&D, when the extended producer responsibility (EPR) is implemented. The question of whether and how the environmental research and development (ER&D) of the producers improving social welfare is discussed.
It is discovered in this thesis that the producers will put less efforts on pollution reducing R&D when the consumers pay more attention on the recycle rate or on the marginal pollution rate of the product. Under a higher disposal cost charged by the government, the total volume of pollution due to the two producers is lager when they invest in ER&D. But under a lower disposal cost, doing ER&D will bring the total pollution to a smaller volume.
On the other hand, it is also observed in this thesis that a higher disposal cost will make the optimal recycling rate of the product less than the social optimum, regardless ER&D being involved or not. In this case, the producer with lower recycle rate puts more efforts on ER&D than that the social optimum demands. In another situation while the government charges a lower waste processing fee, the optimal recycling rates from both producers are close to or exceed the social optimum, also regardless of ER&D. It also happens that the producer with lower recycling rate puts less efforts on ER&D than that the social optimum demands. The amount of investment on ER&D of the producer with high recycling rate depends on how the consumers look at the recycling rate. If the general consumers emphasize on the recycling rate, that producer will put corresponding efforts on ER&D to respond to the social optimum. But if the general consumers do not emphasize on recycling rate, the producer with a higher recycling rate will put more efforts on the pollution reducing R&D more than that the optimum demands. | en_US |