Carbon reduction decisions in green technology collaborative R&D and spillover time lag effects

The time lag of green technology spillovers affects emissions reduction decisions and environmental policies. In this study, we model two competitive manufacturers sharing a common supplier. We investigate their optimal decisions in cooperative and non-cooperative R&D circumstances, considering the presence or absence of a cap-and-trade policy. Findings indicate that the time lag effect of green technology spillovers slows the carbon reductions without a cap-and-trade policy. However, the time lag effect is only emphasized under low carbon trading prices with a cap-and-trade policy. Excessive time lag decreases emission reductions for non-cooperative spillover free-riders. Intra-cooperative spillovers appear more advantageous for both parties involved in the spillover than non-cooperative spillovers. Manufacturers achieve carbon neutrality only at a limited market scale, and collaborative R&D can expand this market scale threshold. Furthermore, we identify the minimum time lag thresholds for manufacturers and supplier to meet the carbon allowance. Collaboration is more conducive to fulfilling carbon allowance in a low-priced carbon trading market.