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Effects of Mixed Oligopoly and Emission Taxes on the Market and Environment

Author

Listed:
  • Woohyung Lee

    (Keimyung University)

  • Tohru Naito

    (Doshisha University)

  • Ki-Dong Lee

    (Keimyung University)

Abstract

The literature has mainly focused on the optimal emission tax rate to internalize the negative externalities of pollutants. Thus, we investigate firms’ technology adoption behavior under an emission taxation system. We also examine the possibility of using a elfare-maximizing public firm with eco-friendly production technology to reduce environmental damage. Private firms can choose clean or normal technology for their production process. The analysis indicates several main results. First, under the emission taxation system, private firms adopt clean technologies even though they bear additional abatement costs in the production process if environmental damage caused by their production process is large. Second, mixed oligopoly is socially desirable when environmental damage is low. Thus, private firms take normal technology. Finally, when private firms adopt clean technology, mixed oligopoly is better than emission taxes if environmental damage is low and if the market is less competitive from a social welfare perspective.

Suggested Citation

  • Woohyung Lee & Tohru Naito & Ki-Dong Lee, 2017. "Effects of Mixed Oligopoly and Emission Taxes on the Market and Environment," Korean Economic Review, Korean Economic Association, vol. 33, pages 267-294.
    • Handle: RePEc:kea:keappr:ker-20171231-33-2-03
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    References listed on IDEAS

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    Cited by:

    1. Teodor Hada & Iulia Iuga & Dorin Wainberg, 2020. "Some Aspects Regarding the Financing of the Environment Fund in Romania," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 954-961, August.
    2. Sung-Hoon Park & Chad Settle, 2022. "Internalizing environmental damages and endogenous reimbursement in environmental conflicts: a game-theoretic analysis," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 69(4), pages 547-569, December.

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    More about this item

    Keywords

    Emission Tax; Mixed Oligopoly; Environmental Damage; Pollution Abatement;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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