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Emission standards vs. taxes: The case of asymmetric Cournot duopoly and uncertain control costs

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  • Clemens Heuson

Abstract

It is well known that uncertainty concerning firms’ costs as well as market power of the latter have to be taken into account in order to design and choose environmental policy instruments in an optimal way. As a matter of fact, in the most actual environmental regulation settings the policy maker has to face both of these complications simultaneously. However, hitherto environmental economic theory has restricted itself to either of them when submitting conventional policy instruments to a comparative analysis. The article at hand accounts for closing this gap by investigating the welfare effects of emission standards and taxes against the background of uncertain emission control costs and a polluting asymmetric Cournot duopoly.

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File URL: http://www.wiwi.uni-augsburg.de/vwl/institut/paper/300.pdf
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Bibliographic Info

Paper provided by Universitaet Augsburg, Institute for Economics in its series Discussion Paper Series with number 300.

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Length: pages
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:aug:augsbe:0300

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Keywords: asymmetric Cournot duopoly; external diseconomies of pollution; cost uncertainty; emission standard; emission tax;

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