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Emission taxes and the market for abatement goods and services

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  • David, Maia
  • Nimubona, Alain-Désiré
  • Sinclair-Desgagné, Bernard

Abstract

This paper examines the effect of emission taxes on pollution abatement and social welfare, when abatement goods and services are provided by a Cournot oligopoly with free-entry. We point out initially that a higher tax not only increases demand for abatement; it also makes polluters less sensitive to price. This attracts a larger number of abatement suppliers while possibly inducing each one of them to produce less. Total abatement always goes up, however, when the delivery of abatement goods and services exhibits decreasing returns to scale. We then calculate the welfare-maximizing emission tax and compare it to the Pigouvian tax.

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Bibliographic Info

Article provided by Elsevier in its journal Resource and Energy Economics.

Volume (Year): 33 (2011)
Issue (Month): 1 (January)
Pages: 179-191

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Handle: RePEc:eee:resene:v:33:y:2011:i:1:p:179-191

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Web page: http://www.elsevier.com/locate/inca/505569

Related research

Keywords: Eco-industry Free-entry oligopoly Endogenous market structure Emission tax;

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References

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  1. Bernard Sinclair-Desgagné & Alain-Désiré Nimubona, 2005. "The Pigouvian Tax Rule in the Presence of an Eco-Industry," Working Papers 2005.57, Fondazione Eni Enrico Mattei.
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Citations

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Cited by:
  1. Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2010. "Polluters and Abaters," Working Papers 1009, University of Waterloo, Department of Economics, revised Sep 2010.
  2. Reichenbach, Johanna & Requate, Till, 2012. "Subsidies for renewable energies in the presence of learning effects and market power," Resource and Energy Economics, Elsevier, vol. 34(2), pages 236-254.
  3. Hattori, Keisuke, 2011. "Optimal Environmental Policy under Monopolistic Provision of Clean Technologies," MPRA Paper 28837, University Library of Munich, Germany.
  4. Julien Jacob, 2011. "Innovation and diffusion in risky industries under liability law: the case of “double-impact” innovations," Working Papers of BETA 2011-24, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  5. Alain-Désiré Nimubona, 2012. "Pollution Policy and Trade Liberalization of Environmental Goods," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 53(3), pages 323-346, November.
  6. Alain-Désiré Nimubona, 2010. "Pollution Policy and Liberalization of Trade in Environmental Goods," Working Papers 1004, University of Waterloo, Department of Economics, revised May 2010.

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