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Unilateral Emission Standards, Quality of Vertically Differentiated Products, and the Global Environment

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Author Info

  • Keisaku Higahsida

    ()
    (School of Economics, Kwansei Gakuin University)

  • Tsuyoshi Toshimitsu

    ()
    (School of Economics, Kwansei Gakuin University)

Abstract

Employing 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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File URL: http://192.218.163.163/RePEc/pdf/kgdp58.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by School of Economics, Kwansei Gakuin University in its series Discussion Paper Series with number 58.

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Length: 36 pages
Date of creation: Jul 2010
Date of revision: Jul 2010
Handle: RePEc:kgu:wpaper:58

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Keywords: emission standards; international duopoly; environmentally differentiated products;

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  1. 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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