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Environmental regulation and mergers within the eco-industry

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  • Joan Canton
  • Maia David
  • Bernard Sinclair-Desgagné

Abstract

The welfare implications of a merger in an environment industry (i.e. the industry that supplies abatement goods and services) are considered in a Cournot-Nash context. The traditional analysis of mergers is extended in two ways. First, we examine how the environmental policy may affect the incentives to merge in this specific sector. Second, we show that mergers in the environment industry impact welfare beyond what is observed in other sectors due to an extra effect on the environment. This could result in a conflict between an anti-trust agency, whose mandate is to focus on consumers' and firms' surplus, and a benevolent regulator considering the overall welfare.

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Bibliographic Info

Paper provided by INRA, Economie Publique in its series Working Papers with number 2007/01.

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Date of creation: 08 Feb 2007
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Handle: RePEc:apu:wpaper:2007/01

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Keywords: Eco-industry; Environmental tax; Horizontal mergers;

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  1. Maia David & Bernard Sinclair-Desgagné, 2005. "Environmental Regulation and the Eco-Industry," Journal of Regulatory Economics, Springer, vol. 28(2), pages 141-155, 09.
  2. Perry, Martin K & Porter, Robert H, 1985. "Oligopoly and the Incentive for Horizontal Merger," American Economic Review, American Economic Association, vol. 75(1), pages 219-27, March.
  3. McAfee, R Preston & Williams, Michael A, 1992. "Horizontal Mergers and Antitrust Policy," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 181-87, June.
  4. Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2005. "The Pigouvian Tax Rule in the Presence of an Eco-Industry," CIRANO Working Papers 2005s-21, CIRANO.
  5. Marie-Laure Allain & Saïd Souam, 2007. "Concentration Horizontale et Relations Verticales," CEPN Working Papers, HAL hal-00143920, HAL.
  6. Hennessy, David A. & Roosen, Jutta, 1999. "Stochastic Pollution, Permits, and Merger Incentives," Staff General Research Papers 1700, Iowa State University, Department of Economics.
  7. Farrell, J. & Shapiro, C., 1988. "Horizontal Mergers: An Equilibrium Analysis," Papers, Princeton, Woodrow Wilson School - Discussion Paper 17, Princeton, Woodrow Wilson School - Discussion Paper.
  8. Joan Canton, 2007. "Environmental Taxation and International Eco-Industries," Working Papers 2007.26, Fondazione Eni Enrico Mattei.
  9. Bergman, Mats A. & Jakobsson, Maria & Razo, Carlos, 2005. "An econometric analysis of the European Commission's merger decisions," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 23(9-10), pages 717-737, December.
  10. Steven Heubeck & Donald J. Smythe & Jingang Zhao, 2006. "A Note on the Welfare Effects of Horizontal Mergers in Asymmetric Linear Oligopolies," Annals of Economics and Finance, Society for AEF, vol. 7(1), pages 29-47, May.
  11. Eberhard Feess & Gerd Muehlheusser, 2002. "Strategic Environmental Policy, Clean Technologies and the Learning Curve," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 23(2), pages 149-166, October.
  12. Joan Canton & Antoine Soubeyran & Hubert Stahn, 2008. "Environmental Taxation and Vertical Cournot Oligopolies: How Eco-industries Matter," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 40(3), pages 369-382, July.
  13. Salant, Stephen W & Switzer, Sheldon & Reynolds, Robert J, 1983. "Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 98(2), pages 185-99, May.
  14. Till Requate, 2005. "Timing and Commitment of Environmental Policy, Adoption of New Technology, and Repercussions on R&D," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 31(2), pages 175-199, 06.
  15. Khemani, R S & Shapiro, Daniel M, 1993. "An Empirical Analysis of Canadian Merger Policy," Journal of Industrial Economics, Wiley Blackwell, vol. 41(2), pages 161-77, June.
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