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Partial cross-ownership and strategic environmental policy

  • Bárcena-Ruiz, Juan Carlos
  • Campo, María Luz

This paper analyzes the effect of passive investment in rival firms on the setting of cooperative and non-cooperative environmental taxes. We consider two firms located in different countries, with each firm owning the same percentage of the stock of its rival. We show that bilateral partial cross-ownership affects the taxes set by the countries in the cooperative and non-cooperative cases. When the stake that one firm has in its rival is great enough and environmental spillovers are low enough, cooperative taxes are lower than non-cooperative taxes. For the remaining values of parameters the opposite result is obtained.

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Article provided by Elsevier in its journal Resource and Energy Economics.

Volume (Year): 34 (2012)
Issue (Month): 2 ()
Pages: 198-210

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Handle: RePEc:eee:resene:v:34:y:2012:i:2:p:198-210
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505569

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  1. R. Simpson, 1995. "Optimal pollution taxation in a Cournot duopoly," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 6(4), pages 359-369, December.
  2. Juan Carlos Bárcena-Ruiz, 2006. "Environmental Taxes and First-Mover Advantages," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 35(1), pages 19-39, September.
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