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.
