Environmental Quality in a Differentiated Duopoly
AbstractIn a duopoly industry with environmentally differentiated products, we examine the effects of introducing a mandatory environmental quality standard on firms’ environmental quality choices, profits, and the average environmental quality offered by the industry. We show that at low standard levels, both firms choose to overcomply regardless of the standard level. At intermediate levels, the mandatory standard can reduce the profit of the low-cost firm while increasing that of the high-cost firm, and that it can lower the industry’s average environmental quality below what it would be without the standard.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2006.138.
Date of creation: Nov 2006
Date of revision:
Duopoly; Environmental Quality; Mandatory Environmental Standard; Overcompliance; Product Differentiation;
Find related papers by JEL classification:
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-23 (All new papers)
- NEP-COM-2007-01-23 (Industrial Competition)
- NEP-ENV-2007-01-23 (Environmental Economics)
- NEP-IND-2007-01-23 (Industrial Organization)
- NEP-MIC-2007-01-23 (Microeconomics)
- NEP-RES-2007-01-23 (Resource Economics)
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