Environmental Technology Licensing Under Emission-Equivalent Environmental Taxes and Standards

We use a two-stage game with an outsider patentee and n homogeneous firms to study the effects of environmental taxes and standards under an equivalent emission on environmental technology licensing behavior. Counter to the intuition, a stricter environmental policy hinders technology licensing since a stricter environmental regulation weakens the licensee’s payment ability. When the innovation size is small, there exists a preference inconsistency on the environmental instrument between the government and the patentee. The patent owner has a higher incentive to license under an environmental standard than under an emission tax with an equivalent emission amount.