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Pollution Taxes for Monopolistically Competitive Firms

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Author Info
Henrik Vetter (Statsbiblioteket - Denmark)
Abstract

This paper examines ways of taxing monopolistically competitive firms that pollute the environment. There are two sources of welfare loss: production externalities and product selection bias associated with fixed costs. We argue that the optimal firm specific tax is always, strictly speaking, less than the Pigouvian tax and that furthermore, under some circumstances, both Pigouvian and optimal taxes leave the monopolistically competitive industry with too few firms. Under either regime, however, the tax targets the right firms.

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Publisher Info
Article provided by Berkeley Electronic Press in its journal Contributions to Theoretical Economics.

Volume (Year): 5 (2005)
Issue (Month): 1 ()
Pages: 1202-1202
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Handle: RePEc:bep:thecon:v:5:y:2005:i:1:p:1202-1202

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Related research
Keywords: externalities monopolistic competition

Find related papers by JEL classification:
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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This page was last updated on 2008-11-20.

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