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Environmental Taxation and Mergers in Oligopoly Markets with Product Differentiation

In: Handbook of Merger Control and Environmental Policy

Author

Listed:
  • Luis Gautier

    (Universidad de Málaga, Departamento de Teoría e Historia, Econòmica)

  • Mahelet G. Fikru

    (Missouri University of Science and Technology)

Abstract

We analyze the effect of mergers on optimal environmental taxation in a Cournot oligopoly market with product differentiation. Our result indicates that the adjustment in emission tax crucially depends on the post-merger output distortion and pollution intensities. Specifically, we find that the optimal emission tax increases post-merger as long as pollution intensity of firms is higher and output distortion smaller post-merger than pre-merger. Furthermore, our result suggests that there is no need to revise environmental policy in markets where pollution intensity of firms does not change post-merger and (i) products are completely differentiated, or (ii) there are many firms for any degree of product differentiation.

Suggested Citation

  • Luis Gautier & Mahelet G. Fikru, 2024. "Environmental Taxation and Mergers in Oligopoly Markets with Product Differentiation," Natural Resource Management and Policy, in: Handbook of Merger Control and Environmental Policy, chapter 0, pages 185-206, Springer.
    • Handle: RePEc:spr:nrmchp:978-3-031-63549-6_10
    DOI: 10.1007/978-3-031-63549-6_10
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    Cited by:

    1. Garcia, Arturo & Leal, Mariel & Lee, Sang-Ho & Park, Chul-Hi, 2024. "Merger incentive and strategic corporate social responsibility by a multiproduct corporation," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 193-206.
    2. Luis Gautier & Mahelet G. Fikru, 2024. "Are Big Mergers Welfare Enhancing When There Is Environmental Externality?," Natural Resource Management and Policy, in: Handbook of Merger Control and Environmental Policy, chapter 0, pages 145-173, Springer.
    3. Fikru, Mahelet G & Ahmed, Bruktawit & Daher, Wassim, 2025. "Characterizing Optimal Decarbonization Policies and Evaluating Variability," OSF Preprints t2bzw_v1, Center for Open Science.
    4. Luis Gautier & Mahelet G. Fikru, 2024. "Electric Utility Mergers in the Presence of Distributed Renewable Energy," Natural Resource Management and Policy, in: Handbook of Merger Control and Environmental Policy, chapter 0, pages 63-92, Springer.
    5. Luis Gautier & Mahelet G. Fikru, 2024. "Cross-Country Emission Tax Effect of Mergers," Natural Resource Management and Policy, in: Handbook of Merger Control and Environmental Policy, chapter 0, pages 207-223, Springer.
    6. Nobuyuki Takashima & Yasunori Ouchida, 2020. "Quality‐improving R&D and merger policy in a differentiated duopoly: Cournot and Bertrand equilibria," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(7), pages 1338-1348, October.
    7. Johansson, Eleanor & Norbäck, Pehr-Johan & Persson, Lars, 2025. "Why a Tariff War May Not Decrease Global CO2 Emissions," Working Paper Series 1526, Research Institute of Industrial Economics.
    8. Luis Gautier & Mahelet G. Fikru, 2024. "Welfare Impact of New Firm Acquisition," Natural Resource Management and Policy, in: Handbook of Merger Control and Environmental Policy, chapter 0, pages 105-132, Springer.
    9. Pak-Sing Choi & Ana Espinola-Arredondo & Felix Munoz, 2020. "Mergers as an environmental ally: Socially excessive and insufficient merger approvals," Working Papers 2020-1, School of Economic Sciences, Washington State University.
    10. Choi, Pak-Sing & Espínola-Arredondo, Ana & Muñoz-García, Félix, 2022. "Environmental policy helping antitrust decisions: Socially excessive and insufficient merger approvals," Resource and Energy Economics, Elsevier, vol. 67(C).
    11. Chuyuan Zhang & Sang‐Ho Lee, 2023. "Foreign passive ownership and tariff‐induced free technology transfer under vertical integration," Manchester School, University of Manchester, vol. 91(2), pages 89-117, March.

    More about this item

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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