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Taxes versus Permits in a Two-Stage Duopoly

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Author Info
Henrik Vetter (Statsbiblioteket - Denmark)
Abstract

In a two-stage Cournot oligopoly cost minimization sometimes calls for ex ante identical firms to invest in diverse technologies. It is an implication of this result that it might be optimal to treat identical duopolistic polluters asymmetrically. We discuss the efficiency properties of a per-unit tax and a tradable permit when ex ante identical duopolists should ideally invest asymmetrically. It is argued that a tradable permit is efficient in promoting differential investments.

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

Volume (Year): 7 (2007)
Issue (Month): 1 ()
Pages: 1318-1318
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Related research
Keywords: environmental regulation taxes permits asymmetric behavior

Find related papers by JEL classification:
Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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  10. Besley, Timothy & Suzumura, Kotaro, 1992. "Taxation and Welfare in an Oligopoly with Strategic Commitment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(2), pages 413-31, May. [Downloadable!] (restricted)
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