Asymmetric information, signaling and environmental taxes in oligopoly
This paper examines the effects of signaling on environmental taxation in a two-period oligopoly model in which each firm privately knows whether its technology is clean or dirty, while third parties (the rival firms and the regulator) have only a subjective perception about this fact. Consequently, there are both horizontal and vertical asymmetric information, and each firm can strategically manipulate both, the competitor's and the regulator's priors. In this context, we find that each firm wishes to be perceived as a technologically clean firm in period 2 whenever the regulator's ecological conscience is sufficiently high. We also show that taxes under symmetric information are always positive, but under asymmetric information and signaling they may be negative (subsidies) and lower or greater than in the symmetric information case, depending on the ecological conscience of the regulator and the probability of firms being dirty. Finally, taxes are below environmental marginal damage, both under symmetric and asymmetric information, and signaling reinforces such under-taxation.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bárcena Ruiz, Juan Carlos & Garzón San Felipe, María Begoña, 2001.
"Mixed Oligopoly and Environmental Policy,"
2001-05, Universidad del País Vasco - Departamento de Economía Aplicada III (Econometría y Estadística).
- Xiangkang Yin, 2003. "Corrective Taxes under Oligopoly with Inter-Firm Externalities," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(2), pages 269-277, October.
- Evan Kwerel, 1977. "To Tell the Truth: Imperfect Information and Optimal Pollution Control," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 595-601.
- 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.
- Leung, Michael C. M., 1992. "Pollution, taxation, and strategic behaviour," Economics Letters, Elsevier, vol. 40(2), pages 251-255, October.
- Ngo Long & Antoine Soubeyran, 2005.
"Selective penalization of polluters: an inf-convolution approach,"
Springer;Society for the Advancement of Economic Theory (SAET), vol. 25(2), pages 421-454, 02.
- Ngo Van Long & Antoine Soubeyran, 2002. "Selective Penalization Of Polluters: An Inf-Convolution Approach," CIRANO Working Papers 2002s-40, CIRANO.
- David Kreps & Robert Wilson, 1998.
Levine's Working Paper Archive
237, David K. Levine.
- Buchanan, James M, 1969. "External Diseconomies, Corrective Taxes, and Market Structure," American Economic Review, American Economic Association, vol. 59(1), pages 174-77, March.
- Lee, Sang-Ho, 1999. "Optimal Taxation for Polluting Oligopolists with Endogenous Market Structure," Journal of Regulatory Economics, Springer, vol. 15(3), pages 293-308, May.
- Partha Dasgupta & Peter Hammond & Eric Maskin, 1980. "On Imperfect Information and Optimal Pollution Control," Review of Economic Studies, Oxford University Press, vol. 47(5), pages 857-860.
- Ross McKitrick, 1999. "A Cournot Mechanism for Pollution Control under Asymmetric Information," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 14(3), pages 353-363, October.
- Francesca Barigozzi & Bertrand Villeneuve, 2006.
"The Signaling Effect of Tax Policy,"
Journal of Public Economic Theory,
Association for Public Economic Theory, vol. 8(4), pages 611-630, October.
- Barnett, A H, 1980. "The Pigouvian Tax Rule under Monopoly," American Economic Review, American Economic Association, vol. 70(5), pages 1037-41, December.
- repec:dau:papers:123456789/5402 is not listed on IDEAS
- Kim, Jae-Cheol & Chang, Ki-Bok, 1993. "An Optimal Tax/Subsidy for Output and Pollution Control under Asymmetric Information in Oligopoly Markets," Journal of Regulatory Economics, Springer, vol. 5(2), pages 183-97, June.
- Ulph, Alistair, 1996. "Environmental Policy and International Trade when Governments and Producers Act Strategically," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 265-281, May.
- Fredrik Carlsson, 2000. "Environmental Taxation and Strategic Commitment in Duopoly Models," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 15(3), pages 243-256, March.
- Levin, Dan, 1985. "Taxation within Cournot oligopoly," Journal of Public Economics, Elsevier, vol. 27(3), pages 281-290, August.
- 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.
When requesting a correction, please mention this item's handle: RePEc:eee:ecolec:v:68:y:2009:i:5:p:1430-1440. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.