Abstract
This chapter examines the optimal two-part tariff licensing strategies of eco-technology by an eco-innovator toward polluting firms. In the presence of environmental regulation, we analyze the vertically related industries where polluting industry may purchase a license of pollution abatement technology from an eco-industry. We find that eco-innovator can construct the optimal two-part tariff licensing strategies to provide non-exclusive licensing contracts. However, the optimal strategies might yield welfare loss for some ranges of production cost and environmental regulation. Therefore, eco-innovator’s two-part tariff licensing strategies should be carefully restricted under the regulatory considerations on environmental policy and industrial policy.
Keywords: Eco-innovator, eco-technology, environmental policy, environmental regulation, industrial policy, licensing contract model, polluting firms, pollution abatement technology, social welfare, two-part tariff licensing.
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