Technological Asymmetry and Cooperative Environmental R&D: A Game-Theoretic Analysis

The energy transition has become a strategic priority for industrial firms. In response to the climate emergency, rising fossil fuel prices, and increasing regulatory pressures, many industrial groups are investing in the development of cleaner technologies. In this context, cooperation in environmental R&D is emerging as a key lever to share costs, pool risks, and benefit from positive technological spillovers. Environmental policies and economic instruments, such as emission taxes, further strengthen this trend by encouraging firms to innovate toward low-carbon solutions. Industrial partnerships such as BMW–Toyota (hydrogen fuel cells), Tesla–Panasonic (electric battery innovation), and Renault–Nissan–Mitsubishi (electric vehicles) clearly illustrate this growing tendency toward cooperation in environmental R&D.

Our contribution builds on this dynamic by adopting a non-cooperative game-theoretic approach. We develop a three-stage game: the regulator first sets an emission tax, then firms choose their level of R&D investment, either jointly under a cooperative scheme (Joint Lab) or individually, and finally compete à la Cournot in the product market. We analyze how asymmetries in production efficiency affect the equilibrium R&D effort, the optimal tax, and overall welfare. The main result shows that as asymmetry increases, the joint R&D effort declines, which can diminish the environmental and welfare benefits of cooperation. Beyond a critical threshold, the cooperative regime may become less effective than non-cooperation.