Managerial Incentive and Optimal Technology Licensing of- Firm in Considering Carbon Tax

With the carbon tax and managerial incentive being imposed, the optimal selection problem of transfer of low carbon technology is discussed. It assumes that, in a duopoly market under managerial incentive with regard to the carbon tax, one of the firms has a lowcarbon technology. Based on Cournot competition model and bargaining model, fixed-fee licensing and royalty licensing are studied by using game theory. It shows that, if the innovation is drastic, the firm does not want to license its low carbon technology. If the innovation is nondrastic, whether the firm is willing to license its technology or not depends on how drastic the innovation is. Royalty licensing is always better than fixed-fee licensing for the innovative firm. There is a managerial incentive that affects the amount of the royalty. Further, different technology licensing influences the firm's equilibrium managerial incentive.