To license or compete: modeling green technology coopetition with Bertrand competition under cap-and-trade policy

This study investigates green technology coopetition strategy between two horizontally competing firms with heterogeneous green technologies under carbon cap-and-trade policy. We develop some game-theoretic models based on Bertrand competition and compare their equilibrium outcomes under competitive and cooperative scenarios to assess the impacts of different strategies on firms, consumers and environment. Through theoretical analysis and numerical simulations, we further examine the sensitivity of key performance indicators—such as product prices, market demands, total profits, carbon emissions and social welfare—to critical parameters. Our findings indicate that firms’ bargaining powers together with initial carbon emission differences and emission-improvement levels are key determinants of their optimal licensing strategies. Moreover, moderate increase in unit carbon trading price may simultaneously improve firms’ profitability and social welfare. These insights remain robust across alternative modes of market competition.