Environmental Taxation and the Structure of the Eco-industry
AbstractWe examine the e®ect of an emission tax when the abatement good or service is supplied by an imperfectly competitive eco-industry with free entry. We show that a higher tax always increases the number of ¯rms in the eco-industry whereas it has an ambiguous e®ect on indi- vidual and total output in the eco-industry. We derive the condition under which total abatement may actually decrease with the emission tax. We then study the policy implications of these results in terms of optimal tax levels.
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Bibliographic InfoPaper provided by INRA, Economie Publique in its series Working Papers with number 2007/02.
Date of creation: 08 Jun 2007
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Eco-industry; Environmental tax; Horizontal mergers;
Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
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