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The switching effect of environmental taxation within Bertrand differentiated duopoly

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  • Kurtyka, Oliwia
  • Mahenc, Philippe

Abstract

We investigate second-best optimal taxation of the polluting variety of a product in a Bertrand duopoly with differentiated varieties. The analysis provides novel insight on a useful social function of environmental regulation. Besides internalizing the environmental externality, the taxation of the polluting variety improves the matching of consumers and product varieties, and so creates a socially desirable business switching between the differentiated varieties.

Suggested Citation

  • Kurtyka, Oliwia & Mahenc, Philippe, 2011. "The switching effect of environmental taxation within Bertrand differentiated duopoly," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 267-277, September.
    • Handle: RePEc:eee:jeeman:v:62:y:2011:i:2:p:267-277
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    Cited by:

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    2. Paolo G. Garella, 2021. "The effects of taxes and subsidies on environmental qualities in a differentiated duopoly," Letters in Spatial and Resource Sciences, Springer, vol. 14(2), pages 197-209, August.
    3. Jason Walter & Yang-Ming Chang, 2017. "Green certification, heterogeneous producers, and green consumers: a welfare analysis of environmental regulations," Journal of Regulatory Economics, Springer, vol. 52(3), pages 333-361, December.
    4. Paolo GARELLA & Maria Teresa TRENTINAGLIA DE DAVERIO, 2015. "Carbon Tax, Emission Permits, and Carbon Leak under Price Competition," Departmental Working Papers 2015-06, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    5. Gutierrez-Hita, Carlos & Martinez-Sanchez, Francisco, 2013. "Environmental Policy to Foster a Green Differentiated Energy Market," MPRA Paper 47263, University Library of Munich, Germany.
    6. Paolo Giorgio Garella & Maria Teresa Trentinaglia, 2019. "Carbon Tax, Emission Standards, and Carbon Leak Under Price Competition," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(4), pages 941-964, April.
    7. Maria Chistyakova & Philippe Mahenc, 2015. "Free-Riding on Environmental Taxation," CEEES Paper Series CE3S-02/15, European University at St. Petersburg, Department of Economics.
    8. Jason M. Walter, 2018. "Understanding the dynamics of clean technology: implications for policy and industry," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 20(2), pages 365-386, April.
    9. Bárcena-Ruiz, Juan Carlos & Campo, María Luz, 2017. "Taxes versus standards under cross-ownership," Resource and Energy Economics, Elsevier, vol. 50(C), pages 36-50.
    10. Choi, Pak-Sing & Espinola-Arredondo, Ana & Munoz-Garcia, Felix, 2024. "Environmental regulation under sequential competition," Journal of Economic Behavior & Organization, Elsevier, vol. 221(C), pages 52-72.
    11. Ba, Bocar Samba & Combes-Motel, Pascale & Schwartz, Sonia, 2020. "Challenging pollution and the balance problem from rare earth extraction: how recycling and environmental taxation matter," Environment and Development Economics, Cambridge University Press, vol. 25(6), pages 634-656, December.
    12. Vetter Henrik, 2014. "Environmental Taxes in Duopoly with Soft Capacity Constraints," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(4), pages 1569-1584, October.
    13. Marc St‐Pierre & Aaron A. Elrod, 2022. "The perverse effect of environmental regulation on emissions: The role of product‐mix changes," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(1), pages 197-235, February.
    14. Jihad C. Elnaboulsi & Wassim Daher & Yiğit Sağlam, 2023. "Environmental taxation, information precision, and information sharing," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(2), pages 301-341, April.
    15. Abdul Baki, Ghina & Marrouch, Walid, 2022. "Environmental taxation in the Bertrand differentiated duopoly: New insights," Resource and Energy Economics, Elsevier, vol. 70(C).
    16. Bocar Samba Ba, 2016. "Phosphorus conservation, eutrophication reduction and social welfare improvement: taxation of extracted phosphorus or subsidy of recycled phosphorus ?," Post-Print hal-02801273, HAL.
    17. Walter, Jason M., 2020. "Comparing the effectiveness of market-based and choice-based environmental policy," Journal of Policy Modeling, Elsevier, vol. 42(1), pages 173-191.
    18. Muñoz-García Félix & Akhundjanov Sherzod B., 2016. "Can Polluting Firms Favor Regulation?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(4), pages 1-23, October.

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