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Trade liberalization and environmental tax in differentiated oligopoly with consumption externalities

Author

Listed:
  • Leonard F.S. Wang

    (Department of Applied Economics, National University of Kaohsiung)

  • Tai-Liang Chen

    (Institute of Economics and Management, National University of Kaohsiung)

  • Ya-Chin Wang

    (Department of Finance and Banking, Kun Shan University)

Abstract

This paper investigates the environment tax and trade liberalization with different market structures (pure oligopoly or mixed oligopoly) juxtaposing the substitutability of the goods (homogenous goods and differentiated goods), wherein environmental damage is associated with consumption. It shows that the environmental tax in mixed oligopoly is higher than in pure oligopoly irrespective of the properties of goods. In addition, it demonstrates that when the domestic market increases its openings, the tariff reduction does not always bring positive effects on the environment in mixed oligopoly but, in pure oligopoly with homogeneous goods, the tariff reduction is bad for the environment.

Suggested Citation

  • Leonard F.S. Wang & Tai-Liang Chen & Ya-Chin Wang, 2007. "Trade liberalization and environmental tax in differentiated oligopoly with consumption externalities," Economics Bulletin, AccessEcon, vol. 17(9), pages 1-9.
    • Handle: RePEc:ebl:ecbull:eb-07q00006
    as

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    References listed on IDEAS

    as
    1. Mark R Metcalfe & John C Beghin, 2015. "Piecemeal Reform of Trade and Environmental Policy When Consumption Also Pollutes," Economics Bulletin, AccessEcon, vol. 35(4), pages 2282-2287.
    2. repec:ebl:ecbull:v:17:y:2006:i:5:p:1-9 is not listed on IDEAS
    3. Shuichi Ohori, 2006. "Trade liberalization, consumption externalities and the environment: a mixed duopoly approach," Economics Bulletin, AccessEcon, vol. 17(5), pages 1-9.
    4. Walz, Uwe & Wellisch, Dietmar, 1997. "Is free trade in the interest of exporting countries when there is ecological dumping?," Journal of Public Economics, Elsevier, vol. 66(2), pages 275-291, November.
    5. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    6. Kenneth Fjell & John S. Heywood, 2002. "Public Stackelberg Leadership in a Mixed Oligopoly with Foreign Firms," Australian Economic Papers, Wiley Blackwell, vol. 41(3), pages 267-281, September.
    7. Krutilla, Kerry, 1991. "Environmental regulation in an open economy," Journal of Environmental Economics and Management, Elsevier, vol. 20(2), pages 127-142, March.
    8. Kenneth Fjell & Debashis Pal, 1996. "A Mixed Oligopoly in the Presence of Foreign Private Firms," Canadian Journal of Economics, Canadian Economics Association, vol. 29(3), pages 737-743, August.
    9. Hackner, Jonas, 2000. "A Note on Price and Quantity Competition in Differentiated Oligopolies," Journal of Economic Theory, Elsevier, vol. 93(2), pages 233-239, August.
    10. Fjell, Kenneth & Heywood, John S, 2002. "Public Stackelberg Leadership in a Mixed Oligopoly with Foreign Firms," Australian Economic Papers, Wiley Blackwell, vol. 41(3), pages 267-281, September.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Wang, Leonard F.S. & Chen, Tai-Liang, 2011. "Mixed oligopoly, optimal privatization, and foreign penetration," Economic Modelling, Elsevier, vol. 28(4), pages 1465-1470, July.
    2. Mark R Metcalfe & John C Beghin, 2015. "Piecemeal Reform of Trade and Environmental Policy When Consumption Also Pollutes," Economics Bulletin, AccessEcon, vol. 35(4), pages 2282-2287.
    3. Leonard Wang & Ya-Chin Wang & Lihong Zhao, 2009. "Trade liberalization, intra-industry trade and the environment: competition mode and the order of firms’ moves," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 56(2), pages 133-144, June.
    4. Tai-Liang Chen & Leonard Wang, 2010. "Trade liberalization and transboundary pollution in an international mixed duopoly," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 12(4), pages 187-200, December.
    5. Liu, Chih-Chen & Mukherjee, Arijit & Wang, Leonard F.S., 2015. "Horizontal merger under strategic tax policy," Economics Letters, Elsevier, vol. 136(C), pages 184-186.

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    More about this item

    JEL classification:

    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • F1 - International Economics - - Trade

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