IDEAS home Printed from https://ideas.repec.org/a/bla/jpbect/v28y2026i1ne70102.html

Emission and Performance Standards in a Duopoly With Differentiated Goods

Author

Listed:
  • Adriana Gama
  • Mario Lechuga‐Calderón

Abstract

We consider a polluting duopoly that sells differentiated goods and is subject to environmental regulation, by means of an emission or a performance standard. The firms simultaneously choose prices and investment in R&D—to improve their abatement technology—and we show that the performance standard leads to lower prices and per‐firm profits, but higher R&D, consumer surplus and social welfare when the goods are substitutes. If the goods are complements, such rankings may be reversed, except for the welfare comparison. We also provide a full comparative statics analysis of the equilibria under both instruments with respect to the stringency of the regulation and the degree of product differentiation. Finally, we show that the entry of firms reduces social welfare and eventually reverses its comparison.

Suggested Citation

  • Adriana Gama & Mario Lechuga‐Calderón, 2026. "Emission and Performance Standards in a Duopoly With Differentiated Goods," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 28(1), February.
    • Handle: RePEc:bla:jpbect:v:28:y:2026:i:1:n:e70102
    DOI: 10.1111/jpet.70102
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jpet.70102
    Download Restriction: no
    File URL: https://libkey.io/10.1111/jpet.70102?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jpbect:v:28:y:2026:i:1:n:e70102. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/apettea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.