ABSTRACT
This chapter proposes an overview of several basic themes underlying the relationship between industry structure, market power, environmental policies and green R&D. I start by stressing that, although the focus is on the Cournot model, the traditional Bertrand vs Cournot debate can be usefully extended to environmental economics. Then I return to the main route, to outline the command optimum in which a benevolent planner sets output levels (and then also R&D efforts for environmentally friendly technologies) so as to maximize a social welfare function that includes external effects in the form of polluting emissions and the exploitation of natural resources. This is contrasted with pure profit-seeking behaviour in an unregulated oligopoly where firms, on the basis of their own undisturbed incentives, refuse to internalize externalities and therefore consider investing in green innovations to be a waste of money.
