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The Pigouvian Tax Rule in the Presence of an Eco-Industry

Author

Listed:
  • Alain-Désiré Nimubona

    () (Department of Economics, University of Waterloo, and CIRANO)

  • Bernard Sinclair-Desgagné

    () (HEC Montréal, CIRANO, and Ecole polytechnique de Paris)

Abstract

Pollution abatement goods and services are now largely being delivered by a specialized "eco-industry". This note reconsiders Pigouvian taxes in this context. We find that the optimal emission tax will depart from the marginal social cost of pollution according to the polluters' and the environment firms' relative market power.

Suggested Citation

  • Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2013. "The Pigouvian Tax Rule in the Presence of an Eco-Industry," Economics Bulletin, AccessEcon, vol. 33(1), pages 747-752.
  • Handle: RePEc:ebl:ecbull:eb-12-00864
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    References listed on IDEAS

    as
    1. Farzin, Y H & Kort, P M, 2000. " Pollution Abatement Investment When Environmental Regulation Is Uncertain," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(2), pages 183-212.
    2. Ngo Van Long & Antoine Soubeyran, 1998. "Pollution, Pigouvian Taxes, and Asymmetric International Oligopoly," CIRANO Working Papers 98s-30, CIRANO.
    3. Maia David & Bernard Sinclair-Desgagné, 2005. "Environmental Regulation and the Eco-Industry," Journal of Regulatory Economics, Springer, pages 141-155.
    4. Barnett, A H, 1980. "The Pigouvian Tax Rule under Monopoly," American Economic Review, American Economic Association, pages 1037-1041.
    5. Buchanan, James M, 1969. "External Diseconomies, Corrective Taxes, and Market Structure," American Economic Review, American Economic Association, pages 174-177.
    6. Katsoulacos, Yannis & Xepapadeas, Anastasios, 1995. " Environmental Policy under Oligopoly with Endogenous Market Structure," Scandinavian Journal of Economics, Wiley Blackwell, pages 411-420.
    7. Morgenstern, Richard, 1995. "Environmental Taxes: Dead or Alive?," Discussion Papers dp-96-03, Resources For the Future.
    8. Stephen Smith, 1992. "Taxation and the environment: a survey," Fiscal Studies, Institute for Fiscal Studies, pages 21-57.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Joan Canton & Maia David & Bernard Sinclair-Desgagné, 2007. "Environmental regulation and mergers within the eco-industry," Working Papers 2007/01, INRA, Economie Publique.
    2. Alain-Désiré Nimubona, 2010. "Pollution Policy and Liberalization of Trade in Environmental Goods," Working Papers 1004, University of Waterloo, Department of Economics, revised May 2010.
    3. Sonia Schwartz & Hubert Stahn, 2014. "Competitive Permit Markets and Vertical Structures: The Relevance of Imperfectly Competitive Eco-Industries," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(1), pages 69-95, February.
    4. Idrissa G.-O. Sibailly, 2015. "On the pigouvian tax rule in an open economy: the case of abatement technology trade," Economics Bulletin, AccessEcon, vol. 35(4), pages 2733-2741.
    5. Joan Canton, 2007. "Redealing the Cards: How the Presence of an Eco-Industry Modifies the Political Economy of Environmental Policies," Working Papers 2007.25, Fondazione Eni Enrico Mattei.
    6. Joan Canton & Antoine Soubeyran & Hubert Stahn, 2008. "Environmental Taxation and Vertical Cournot Oligopolies: How Eco-industries Matter," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 369-382.
    7. Maia David & Bernard Sinclair-Desgagné, 2005. "Environmental Regulation and the Eco-Industry," Journal of Regulatory Economics, Springer, vol. 28(2), pages 141-155, September.
    8. Canton, Joan & David, Maia & Sinclair-Desgagné, Bernard, 2012. "Environmental Regulation and Horizontal Mergers in the Eco-industry," Strategic Behavior and the Environment, now publishers, pages 107-132.
    9. Alain-Désiré Nimubona, 2012. "Pollution Policy and Trade Liberalization of Environmental Goods," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 323-346.
    10. Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2011. "Polluters and Abaters," Annals of Economics and Statistics, GENES, pages 9-24.
    11. Damien Sans & Sonia Schwartz & Hubert Stahn, 2014. "About Polluting Eco-Industries: Optimal Provision of Abatement Goods and Pigouvian Fees," Working Papers halshs-01083464, HAL.
    12. Canton, Joan, 2008. "Redealing the cards: How an eco-industry modifies the political economy of environmental taxes," Resource and Energy Economics, Elsevier, vol. 30(3), pages 295-315, August.
    13. Idrissa Sibailly, 2013. "On the Pigouvian Tax Rule in an Open Economy: Opening the Gate to the Eco-industry," Working Papers hal-00911464, HAL.
    14. Damien Sans, 2015. "Optimal Taxation Rule Reversal in the Presence of Gentle Polluters and Greedy Cleaners," Working Papers halshs-01247190, HAL.
    15. Maia David & Bernard Sinclair-Desgagné, 2006. "Revisiting the Environmental Subsidy in the Presence of an Eco-Industry," Working Papers 2006/04, INRA, Economie Publique.
    16. Maia David & Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2007. "Environmental Taxation and the Structure of the Eco-industry," Working Papers 2007/02, INRA, Economie Publique.
    17. Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2011. "Polluters and Abaters," Annals of Economics and Statistics, GENES, pages 9-24.
    18. Joan Canton, 2007. "Environmental Taxation and International Eco-Industries," Working Papers 2007.26, Fondazione Eni Enrico Mattei.
    19. David, Maia & Nimubona, Alain-Désiré & Sinclair-Desgagné, Bernard, 2011. "Emission taxes and the market for abatement goods and services," Resource and Energy Economics, Elsevier, vol. 33(1), pages 179-191, January.
    20. Alain-Désiré Nimubona & Hassan Benchekroun, 2014. "Environmental R&D in the Presence of an Eco-Industry," Working Papers 1406, University of Waterloo, Department of Economics, revised Sep 2014.

    More about this item

    Keywords

    Pigouvian taxes; eco-industry;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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