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Environmental regulation incidences towards international oligopolies: pollution taxes vs emission permits

Author

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  • Florent Pratlong

    () (ERASME, Ecole Centrale Paris. EUREQua and PRISM-LASI, Université Paris 1.)

Abstract

The purpose of this paper is to analyze whether the choice between two instruments of environmental policy (pollution taxes vs emission permits) affects the market shares in the presence of imperfectly competitive product markets. We consider two countries, referred to as the Domestic country and the Foreign country, agreeing on an equally stringent exogenous ceiling on pollution. These countries are also suppliers on the international markets of two commodities produced by two separate sectors competing à− la− Cournot. The environmental policy taken by each government is different. The Domestic country implements a tradable emission permits market, while the Foreign country imposes a specific pollution tax across sectors. Thus, the Higher− Abatement− Cost (the Lower) sector in the Domestic country increases (decreases) its market shares compared to its counterpart in the Foreign country.

Suggested Citation

  • Florent Pratlong, 2005. "Environmental regulation incidences towards international oligopolies: pollution taxes vs emission permits," Economics Bulletin, AccessEcon, vol. 17(6), pages 1-10.
  • Handle: RePEc:ebl:ecbull:eb-05q20002
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    References listed on IDEAS

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    1. Eftichios Sartzetakis, 1997. "Tradeable emission permits regulations in the presence of imperfectly competitive product markets: Welfare implications," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 9(1), pages 65-81, January.
    2. Kennedy Peter W., 1994. "Equilibrium Pollution Taxes in Open Economies with Imperfect Competition," Journal of Environmental Economics and Management, Elsevier, vol. 27(1), pages 49-63, July.
    3. Rob Van der Laan & Andries Nentjes, 2001. "Competitive Distortions in EU Environmental Legislation: Inefficiency versus Inequity," European Journal of Law and Economics, Springer, vol. 11(2), pages 131-152, March.
    4. R. Simpson, 1995. "Optimal pollution taxation in a Cournot duopoly," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 6(4), pages 359-369, December.
    5. Sartzetakis, Eftichios Sophocles & Constantatos, Christos, 1995. "Environmental Regulation and International Trade," Journal of Regulatory Economics, Springer, vol. 8(1), pages 61-72, July.
    6. Malueg, David A., 1990. "Welfare consequences of emission credit trading programs," Journal of Environmental Economics and Management, Elsevier, vol. 18(1), pages 66-77, January.
    7. Nannerup, Niels, 2001. "Equilibrium pollution taxes in a two industry open economy," European Economic Review, Elsevier, vol. 45(3), pages 519-532, March.
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    More about this item

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • F1 - International Economics - - Trade

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