Treffer: Co-opetitive sustainable technology development strategy under government subsidy.

Motivated by cooperative practices in sustainable technology development, our study examines the strategic decision of a sustainable firm on whether to cooperate with a non-sustainable competitor in developing sustainable technology. We find that a significant brand value difference prompts the sustainable firm to exert greater sustainability effort through cooperation, while increasingly commanding premium prices. By accounting for brand competition and investment costs, we identify a ‘win-win-win’ outcome that enhances both firms’ profits and improves social welfare. Interestingly, the type of firm portfolio plays no role in social welfare, and the sustainable firm shows a stronger propensity to partner with a non-sustainable firm with lower brand value. Extension to our model shows that when both firms can invest independently, the firm with inferior brand value always benefits more from cooperation. Additionally, incorporating environmental impact metrics reveals that while greater environmental hazard necessitates higher subsidy to stimulate sustainability effort, it may reduce overall social welfare due to the substantial economic cost of government intervention. [ABSTRACT FROM AUTHOR]

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