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Polluters and Abaters

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  • Alain-Désiré Nimubona

    (Department of Economics, University of Waterloo, and CIRANO)

  • Bernard Sinclair-Desgagné

    (HEC Montréal, CIRANO and École polytechnique)

Abstract

To comply with laws, regulations and social demands, polluting firms increasingly purchase the needed means from specialized suppliers. This paper analyzes this relatively recent phenomenon. We show how environmental regulation, the size of the output market, the elasticity of demand for abatement goods and services, and the fact that in-house and outsourced abatement expenses are substitutes or complements can influence a polluter’s make-or-buy decision. Specific features of abatement outsourcing are highlighted, qualifications and refinements of the theory of vertical integration are then proposed, and some consequences for environmental policy are briefly discussed.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2010.146.

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Date of creation: Nov 2010
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Handle: RePEc:fem:femwpa:2010.146

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Keywords: Eco-industry; Make-or-buy Decision; Outsourcing; Vertical Integration;

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References

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  1. Maia David & Bernard Sinclair-Desgagné, 2004. "Environmental Regulation and the Eco-industry," CIRANO Working Papers 2004s-42, CIRANO.
  2. Stefan Ambec & Paul Lanoie, 2007. "When and why does it pay to be green?," Cahiers de recherche 07-04, HEC Montréal, Institut d'économie appliquée.
  3. Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2005. "The Pigouvian Tax Rule in the Presence of an Eco-Industry," CIRANO Working Papers 2005s-21, CIRANO.
  4. Poyago-Theotoky, J.A., 2007. "The organization of R&D and environmental policy," Journal of Economic Behavior & Organization, Elsevier, vol. 62(1), pages 63-75, January.
  5. Greaker, Mads & Rosendahl, Knut Einar, 2008. "Environmental policy with upstream pollution abatement technology firms," Journal of Environmental Economics and Management, Elsevier, vol. 56(3), pages 246-259, November.
  6. Requate, Till, 2003. "Commitment and Timing of Environmental Policy, Adoption of New Technology and Repercussions on R&D," Economics Working Papers 2003,07, Christian-Albrechts-University of Kiel, Department of Economics.
  7. Maia David & Bernard Sinclair-Desgagné, 2010. "Pollution Abatement Subsidies and the Eco-Industry," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 45(2), pages 271-282, February.
  8. Maia David & Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2011. "Emission taxes and the market for abatement goods and services," Working Papers 46682, Institut National de la Recherche Agronomique, France.
  9. 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.
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Cited by:
  1. Alain-Désiré Nimubona, 2012. "Pollution Policy and Trade Liberalization of Environmental Goods," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 53(3), pages 323-346, November.

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