The Impact of Cross-ownership on the Value of a Clean Technology in the Energy Market

This paper examines how corporate cross-ownership in a polluting fossil fuel oligopoly affects the value of a clean energy substitute with a given capacity in different environmental scenarios. When environmental damages are large enough, an increased cross-ownership among polluting firms reduces th...

Full description

Saved in:
Bibliographic Details
Published inEnvironmental modeling & assessment Vol. 27; no. 6; pp. 1007 - 1019
Main Authors Benchekroun, Hassan, Dai, Miao, Long, Ngo Van
Format Journal Article
LanguageEnglish
Published Cham Springer International Publishing 01.12.2022
Springer Nature B.V
Subjects
Applications of Mathematics
Clean energy
Clean technology
Earth and Environmental Science
Energy industry
Environment
Environmental degradation
Fossil fuels
Math. Appl. in Environmental Science
Mathematical Modeling and Industrial Mathematics
Operations Research/Decision Theory
Ownership
Pollution
Pollution control
Q4
Energy
L41
Clean Technology
Environmental Damages
Cross-ownership
Oligopoly
L13
Online AccessGet full text

Cover

More Information
Summary:This paper examines how corporate cross-ownership in a polluting fossil fuel oligopoly affects the value of a clean energy substitute with a given capacity in different environmental scenarios. When environmental damages are large enough, an increased cross-ownership among polluting firms reduces the gains from investment in the clean energy sector. However, if environmental damages are small enough, a non-marginal increase in cross-ownership may increase the value of a clean technology. The main intuition behind this result is that an increased cross-ownership results in a decrease of environmental damages due to an overall decrease of quantity of energy supplied by the polluting firms, and therefore, if environmental damages are large enough, there will be substantial gains from reduced pollution damages associated with it, thus decreasing the need for clean energy. However, if environmental damages are small enough, the welfare loss from a less intensified competition due to increased cross-ownership outweighs the possible benefits of reduced pollution, thereby increasing the value of a clean technology. Our qualitative conclusions hold true under different demand specifications.
ISSN:1420-2026
1573-2967
DOI:10.1007/s10666-022-09840-7