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Environmental and Trade Policies for Oligopolistic Industry in the Presence of Consumption Externalities

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Author Info

  • Jota Ishikawa

    (Hitotsubashi University (Japan) and RIETI (Japan))

  • Toshihiro Okubo

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

We explore the effects of environmental and trade policies with negative consumption externalities when a domestic firm and a foreign rival produce imperfect substitutes and compete in the domestic market. Consumption of the foreign product generates more emissions than that of the domestic product. Emission taxes reduce emissions, harm the foreign firm, but may benefit the domestic firm. Tariffs could mitigate externalities more "effectively" than emission taxes. Consumption subsidies provided to the domestic product may raise emissions and worsen domestic welfare. Stringent environmental policies may induce the foreign firm to produce an environmentally friendly good, though environmental damages may increase.

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File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2010-28.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number DP2010-28.

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Length: 23 pages
Date of creation: Oct 2010
Date of revision:
Handle: RePEc:kob:dpaper:dp2010-28

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Related research

Keywords: Environmental policies; Trade policies; Consumption externalities; International oligopoly; Differentiated products;

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Cited by:
  1. Takao Asano & Noriaki Matsushima, 2012. "Environmental regulation and technology transfers," ISER Discussion Paper 0862, Institute of Social and Economic Research, Osaka University.

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