Optimal Emission Tax with Endogenous Location Choice of Duopolistic Firms
AbstractThis paper explores optimal environmental tax policy under which duopoly firms strategically choose the location of their plants in a simple three-stage game. We examine how the relationship between the optimal emission tax and the choice of location of duopoly firms affects the welfare of the home country. We characterize the relationship between the optimal emission tax and the fixed cost, depending on the degree of environmental damage from production. Finally, we show the existence of asymmetric equilibrium in which either firm chooses relocation of its plant even if the duopoly firms are identical ex ante.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2010.6.
Date of creation: Jan 2010
Date of revision:
Environmental policy; Relocation; Welfare;
Other versions of this item:
- Masako Ikefuji & Jun-ichi Itaya & Makoto Okamura, 2009. "Optimal emission tax with endogenous location choice of duopolistic firms," ISER Discussion Paper 0762, Institute of Social and Economic Research, Osaka University.
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-06 (All new papers)
- NEP-ENE-2010-03-06 (Energy Economics)
- NEP-ENV-2010-03-06 (Environmental Economics)
- NEP-PUB-2010-03-06 (Public Finance)
- NEP-REG-2010-03-06 (Regulation)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- James R. Markusen & Edward R. Morey & Nancy Olewiler, 1991.
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NBER Working Papers
3671, National Bureau of Economic Research, Inc.
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- Yomogida, Morihiro, 2007. "Fragmentation, welfare, and imperfect competition," Journal of the Japanese and International Economies, Elsevier, vol. 21(3), pages 365-378, September.
- M Ali Khan, 2007. "Perfect Competition," Microeconomics Working Papers 22207, East Asian Bureau of Economic Research.
- Petrakis, Emmanuel & Xepapadeas, Anastasios, 2003. "Location decisions of a polluting firm and the time consistency of environmental policy," Resource and Energy Economics, Elsevier, vol. 25(2), pages 197-214, May.
- Markusen, James R. & Morey, Edward R. & Olewiler, Nancy, 1995. "Competition in regional environmental policies when plant locations are endogenous," Journal of Public Economics, Elsevier, vol. 56(1), pages 55-77, January.
- Katsoulacos, Yannis & Xepapadeas, Anastasios, 1994.
"Environmental Policy Under Oligopoly with Endogenous Market Structure,"
CEPR Discussion Papers
955, C.E.P.R. Discussion Papers.
- Katsoulacos, Yannis & Xepapadeas, Anastasios, 1995. " Environmental Policy under Oligopoly with Endogenous Market Structure," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(3), pages 411-20, September.
- Mills, David E. & Smith, William, 1996. "It pays to be different: Endogenous heterogeneity of firms in an oligopoly," International Journal of Industrial Organization, Elsevier, vol. 14(3), pages 317-329, May.
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