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Effects of carbon tax on environment under duopoly

Author

Listed:
  • You-hua Chen

    (South China Agricultural University)

  • Pu-yan Nie

    (Guangdong University of Finance & Economics (GDUFE))

  • Chan Wang

    (Guangdong University of Finance & Economics (GDUFE))

Abstract

Environment protection and green development is of great importance. Therefore, this paper attempts to propose an environmentally friendly and sustainable development model that depends on environmental economics and game theory. This paper employs an analytical approach to show that the effects of carbon tax on environment regulation in case of the duopoly market structure. Some interesting conclusions are obtained. Firstly, factors affecting carbon tax, such as the importance of environment to the government, are captured. Secondly, this paper shows that low efficiency firm has more stimulation to reduce product substitutability and more motivation to practice product efficiency improving innovations. Thirdly, optimal carbon tax is compared between tax on energy input and unit carbon tax. The results show that unit tax is lower than energy input tax under optimal condition. More importantly, the numeric results of the paper clearly demonstrate that those countries committed to environment prefer input tax since it is more efficient in reducing energy consumption, while a profit maximization approach leads to the unit carbon tax. The findings of this paper can be helpful to those who are responsible for the environment and sustainable progress.

Suggested Citation

  • You-hua Chen & Pu-yan Nie & Chan Wang, 2021. "Effects of carbon tax on environment under duopoly," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(9), pages 13490-13507, September.
    • Handle: RePEc:spr:endesu:v:23:y:2021:i:9:d:10.1007_s10668-020-01222-x
    DOI: 10.1007/s10668-020-01222-x
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    References listed on IDEAS

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    Cited by:

    1. Chen, You-hua & Chen, Liu-man & Mishra, Ashok K., 2021. "Information, Capacity Constraints and Quality on Firms Competition," 2021 ASAE 10th International Conference (Virtual), January 11-13, Beijing, China 329427, Asian Society of Agricultural Economists (ASAE).

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