Environmental Externalities and the Optimal Level of Market Power
AbstractThis article derives the condition under which agricultural chemical producers' desire to under-produce, associated with market power, exactly offsets the tendency to overproduce, due to their failure to consider externality costs of agricultural chemicals. This condition is satisfied when the price markup in the chemical industries equals the marginal environmental damages caused by chemicals. Our estimates of price markup for nitrogen, phosphate, and pesticides industries indicate that the welfare loss caused by market power is exactly offset by environmental benefits if the marginal pollution costs are, respectively, eight, nine, and twenty-two cents for each dollar's worth of these chemicals. Copyright 1999, Oxford University Press.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.
Volume (Year): 81 (1999)
Issue (Month): 4 ()
Contact details of provider:
Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org/
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Lori Bennear & Robert Stavins, 2007. "Second-best theory and the use of multiple policy instruments," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 37(1), pages 111-129, May.
- Chang, Hung-Hao & Boisvert, Richard N. & Blandford, David, 2005. "Achieving Environmental Objectives Under Reduced Domestic Agricultural Support and Trade Liberalization: An Empirical Application to Taiwan," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 34(1), April.
- Kim, C.S. & Hallahan, Charles B. & Taylor, Harold & Schluter, Gerald E., 2002. "Market Power And Cost-Efficiency Effects Of The Market Concentration In The U.S. Nitrogen Fertilizer Industry," 2002 Annual meeting, July 28-31, Long Beach, CA 19674, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.