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Alcoa re-Revisited: Recycling, Market Power and Environmental Policy

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  • Jean De Beir
  • Guillaume Girmens

Abstract

This article incorporates an environmental dimension into the study of markets characterised by producers of a primary good in a position of market power over a sector of recycling. In the model used, production of the primary good by a monopolistic firm is polluting, whereas production of the recycled good is not. Taxing the monopolistic firm allows to reduce pollution, at the price of a reduction in the total quantity of good produced. The effect of a subsidy for recycling depends on the slopes of the demand curve and of the recycler's supply curve. It is ambiguous in terms of welfare, but it always encourages recycling.

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File URL: http://www.cepii.fr/IE/rev120/ei120b.htm
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Bibliographic Info

Article provided by CEPII research center in its journal Economie Internationale.

Volume (Year): (2009)
Issue (Month): 120 ()
Pages: 37-52

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Handle: RePEc:cii:cepiei:2009-4tb

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Keywords: Recycling; market power; environmental externalities; environmental policy;

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