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The Effects of Emissions Standards on Industry

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  • Farzin, Y H

Abstract

Industrialists often claim that, by rendering firms unprofitable and hence forcing them out of business, stricter emissions standards reduce the industry output and competition. This paper considers situations where firms' pollution reduction increases the industry demand, but, because of inability to coordinate their emissions reductions, and thus free riding problem, they are unable to act in their own collective interest. For such situations, the paper studies the effects of emissions standards on the equilibrium in an oligopoly market. It shows conditions under which a stricter standard leads to a larger number of firms in the industry, a greater industry output, and a lower total pollution in the long run. Copyright 2003 by Kluwer Academic Publishers

Suggested Citation

  • Farzin, Y H, 2003. "The Effects of Emissions Standards on Industry," Journal of Regulatory Economics, Springer, vol. 24(3), pages 315-327, November.
  • Handle: RePEc:kap:regeco:v:24:y:2003:i:3:p:315-27
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    Citations

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    Cited by:

    1. Anthony Heyes, 2009. "Is environmental regulation bad for competition? A survey," Journal of Regulatory Economics, Springer, vol. 36(1), pages 1-28, August.
    2. Michaël Aklin & Patrick Bayer & S. Harish & Johannes Urpelainen, 2014. "Who blames corruption for the poor enforcement of environmental laws? Survey evidence from Brazil," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 16(3), pages 241-262, July.
    3. Sengupta Aditi, 2010. "Environmental Regulation and Industry Dynamics," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-29, June.
    4. Y. Hossein Farzin & Ken-Ichi Akao, 2006. "Environmental Quality in a Differentiated Duopoly," Working Papers 2006.138, Fondazione Eni Enrico Mattei.
    5. André, Francisco J., 2015. "Strategic Effects and the Porter Hypothesis," MPRA Paper 62237, University Library of Munich, Germany.
    6. repec:spr:envpol:v:19:y:2017:i:2:d:10.1007_s10018-016-0166-1 is not listed on IDEAS
    7. Ana Espínola-Arredondo & Félix Muñoz-García, 2016. "Profit-enhancing environmental policy: uninformed regulation in an entry-deterrence model," Journal of Regulatory Economics, Springer, vol. 50(2), pages 146-163, October.
    8. Lambert Schoonbeek & Frans Vries, 2009. "Environmental taxes and industry monopolization," Journal of Regulatory Economics, Springer, vol. 36(1), pages 94-106, August.
    9. Rinaldo Brau & Carlo Carraro, 2011. "The design of voluntary agreements in oligopolistic markets," Journal of Regulatory Economics, Springer, vol. 39(2), pages 111-142, April.
    10. Y.H. Farzin & C.A. Bond, 2012. "Unbundling Technology Adoption and tfp at the Firm Level. Do Intangibles Matter?," Working Papers 2012.97, Fondazione Eni Enrico Mattei.
    11. Lahiri, Sajal & Ono, Yoshiyasu, 2015. "Pollution, foreign direct investment, and welfare," Research in Economics, Elsevier, vol. 69(2), pages 238-247.
    12. Ana Espínola-Arredondo & Félix Muñoz-García, 2012. "When do firms support environmental agreements?," Journal of Regulatory Economics, Springer, vol. 41(3), pages 380-401, June.
    13. Zhen Zhang & Joshua Hinger & David Audretsch & Guojun Song, 2015. "Environmental technology transfer and emission standards for industry in China," The Journal of Technology Transfer, Springer, vol. 40(5), pages 743-759, October.
    14. Florian Baumann & Tim Friehe, 2017. "Design standards and technology adoption: welfare effects of increasing environmental fines when the number of firms is endogenous," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(2), pages 427-450, April.

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