Unilateral Emission Standards, Quality of Vertically Differentiated Products, and the Global Environment
AbstractEmploying an environmentally-differentiated products model with heterogeneous consumers in terms of environmental consciousness, this paper examines the effect of a unilateral change in a home emission standard on the qualities of products, aggregate emissions, and welfare of both home and foreign countries. When firms compete with each other in a Cournot fashion, as the home emission standard becomes stricter, aggregate emissions of both domestic and foreign countries decrease, if a firm which produces a gdirtier producthf supplies the same product to both domestic and foreign markets. On the other hand, if the firm supplies different products in environmental features to different markets, a stricter emission standard by the home government increases aggregate emissions of the foreign country. Even in the Bertrand duopoly case, the effects of a stricter emission standard on both countries could be different from each other.
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Bibliographic InfoPaper provided by School of Economics, Kwansei Gakuin University in its series Discussion Paper Series with number 58.
Length: 36 pages
Date of creation: Jul 2010
Date of revision: Jul 2010
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emission standards; international duopoly; environmentally differentiated products;
Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
- Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
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- José Moraga-González & Noemi Padrón-Fumero, 2002. "Environmental Policy in a Green Market," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(3), pages 419-447, July.
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