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Ecological Dumping under Monopolistic Competition

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  • Pfluger, Michael
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    Abstract

    The competitive choice of emission taxes by two governments is analysed in a model of monopolistic competition with capital mobility where pollution externalities are regional. Assuming that governments have no other policy instrument apart from emission taxes at their disposal, I show that governments choose inefficiently low (high) taxes if the importance of emissions in production is small (large) relative to transport costs and the mark-up. In contrast to the previous literature, the marginal disutility of pollution is not among the parameters which separate the non-cooperative choice of emission taxes from the social planner's choice. Copyright 2001 by The editors of the Scandinavian Journal of Economics.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

    Volume (Year): 103 (2001)
    Issue (Month): 4 (December)
    Pages: 689-706

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    Handle: RePEc:bla:scandj:v:103:y:2001:i:4:p:689-706

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    Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442

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    Cited by:
    1. van 't Veld, Klaas & Shogren, Jason F., 2012. "Environmental federalism and environmental liability," Journal of Environmental Economics and Management, Elsevier, vol. 63(1), pages 105-119.
    2. Andreas Haufler & Michael Pflüger, 2003. "Market Structure and the Taxation of International Trade," CESifo Working Paper Series 1080, CESifo Group Munich.
    3. Andreas Haufler & Michael Pflüger, 2001. "International Commodity Taxation Under Monopolistic Competition," CESifo Working Paper Series 529, CESifo Group Munich.
    4. Ishikawa, Jota & Okubo, Toshihiro, 2008. "Greenhouse-gas Emission Controls and International Carbon Leakage through Trade Liberalization," CCES Discussion Paper Series 3, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    5. Forslid, Rikard & Okubo, Toshihiro & Sanctuary, Mark, 2013. "Trade, Transboundary Pollution and Market Size," Research Papers in Economics 2013:8, Stockholm University, Department of Economics.
    6. Richard Nahuis & Paul Tang, 2005. "Environmental policy competition and differential tax treatment; a case for tighter coordination?," CPB Discussion Paper 50, CPB Netherlands Bureau for Economic Policy Analysis.

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