Low-carbon technology transfer between rival firms under cap-and-trade policies

Xu Chen, Xiaojun Wang, Yusen Xia

Research output: Contribution to journalArticle (Academic Journal)peer-review

1 Citation (Scopus)
6 Downloads (Pure)

Abstract

We investigate the effects of low-carbon technology transfer between two rival
manufacturers on their economic, environmental, and social welfare performance under a cap-and-trade policy. We model alternative licensing arrangements of technology transfer and evaluate the model performance from the perspectives of different stakeholders, including manufacturers, customers, and policy makers. Our findings show that the contractual choice on low-carbon technology licensing is dependent on the trade-off between the benefits gained from technology licensing and the consequential losses incurred from competition with a strengthened competitor, which is influenced by a combination of factors, including internal technological abilities, the interfirm power relationship, external market competition, and the carbon emission control policy. Among them, the interfirm power relationship is most influential in determining the optimal contractual decision. In addition, we extend the analysis of technology licensing strategies to different carbon emissions caps with additional cost incurred from purchasing emission allowances through auction, and a two-period model considering emissions cap reduction respectively. Finally, our analyses show it is critical for policy makers to develop appropriate emissions control policies to promote the agenda of a sustainable, low-carbon economy.
Original languageEnglish
Pages (from-to)105-121
Number of pages17
JournalIISE Transactions
Volume54
Issue number2
Early online date14 Jun 2021
DOIs
Publication statusPublished - 2021

Bibliographical note

Funding Information:
The first author is supported by the National Key R&D Program of China (No. 2020YFB1711900), Major Program of National Social Science Foundation of China (No. 20&ZD084), and National Natural Science Foundation of China (No. 91646109).

Publisher Copyright:
© Copyright © 2021 “IISE”.

Keywords

  • low-carbon manufacturing
  • technology licensing
  • cap-and-trade
  • sustainability

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