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The Effects of Emissions Standards on Industry

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  • Farzin, Y H

Abstract

Industrialists often claim that, by rendering firms unprofitable and hence forcing them out of business, stricter emissions standards reduce the industry output and competition. This paper considers situations where firms' pollution reduction increases the industry demand, but, because of inability to coordinate their emissions reductions, and thus free riding problem, they are unable to act in their own collective interest. For such situations, the paper studies the effects of emissions standards on the equilibrium in an oligopoly market. It shows conditions under which a stricter standard leads to a larger number of firms in the industry, a greater industry output, and a lower total pollution in the long run. Copyright 2003 by Kluwer Academic Publishers

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Bibliographic Info

Article provided by Springer in its journal Journal of Regulatory Economics.

Volume (Year): 24 (2003)
Issue (Month): 3 (November)
Pages: 315-27

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Handle: RePEc:kap:regeco:v:24:y:2003:i:3:p:315-27

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Web page: http://www.springerlink.com/link.asp?id=100298

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Cited by:
  1. Y.H. Farzin & C.A. Bond, 2012. "Unbundling Technology Adoption and tfp at the Firm Level. Do Intangibles Matter?," Working Papers 2012.97, Fondazione Eni Enrico Mattei.
  2. Lambert Schoonbeek & Frans Vries, 2009. "Environmental taxes and industry monopolization," Journal of Regulatory Economics, Springer, vol. 36(1), pages 94-106, August.
  3. Y. Hossein Farzin & Ken-Ichi Akao, 2006. "Environmental Quality in a Differentiated Duopoly," Working Papers 2006.138, Fondazione Eni Enrico Mattei.
  4. Aditi Sengupta, 2009. "Environmental Regulation and Industry Dynamics," Departmental Working Papers 0903, Southern Methodist University, Department of Economics.
  5. Ana Espínola-Arredondo & Félix Muñoz-García, 2012. "When do firms support environmental agreements?," Journal of Regulatory Economics, Springer, vol. 41(3), pages 380-401, June.
  6. Anthony Heyes, 2009. "Is environmental regulation bad for competition? A survey," Journal of Regulatory Economics, Springer, vol. 36(1), pages 1-28, August.
  7. R. Brau & C. Carraro, 2009. "The Design of Voluntary Agreements in Oligopolistic Markets," Working Paper CRENoS 200907, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

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