Revisiting the Environmental Subsidy in the Presence of an Eco-Industry
This paper re-considers environmental subsidies in the context where polluting firms procure their abatement goods and services from a specialized oligopoly. In order to maximize social welfare, a regulator must then simultaneously alleviate two distortions: one that comes from pollution and the other that is due to the environment firms' market power. We find that the combination of an emission tax and a subsidy to polluters cannot achieve the first-best, while the opposite positive conclusion obtains if the subsidy is granted instead to environment firms. When public transfers are themselves subject to distortions, however, welfare may be higher if only an emission tax is used.
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- Ian Parry, 1998. "A Second-Best Analysis of Environmental Subsidies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 5(2), pages 153-170, May.
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- Maia David & Bernard Sinclair-Desgagné, 2004.
"Environmental Regulation and the Eco-Industry,"
2004/06, INRA, Economie Publique.
- Maia David & Bernard Sinclair-Desgagné, 2004. "Environmental Regulation and the Eco-industry," CIRANO Working Papers 2004s-42, CIRANO.
- Bernard Sinclair-Desgagné & Maia David, 2005. "Environmental Regulationand the Eco-Industry," Working Papers 2005.56, Fondazione Eni Enrico Mattei.
- Maia David & Bernard Sinclair-Desgagné, 2005. "Environmental regulation and the eco-industry," Working Papers hal-00243019, HAL.
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De Gruyter, vol. 2(1), pages 1-22, January.
- Don Fullerton & Robert D. Mohr, 2002. "Suggested Subsidies are Sub-optimal Unless Combined with an Output Tax," NBER Working Papers 8723, National Bureau of Economic Research, Inc.
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- Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2005. "The Pigouvian Tax Rule in the Presence of an Eco-Industry," CIRANO Working Papers 2005s-21, CIRANO.
- Bernard Sinclair-Desgagné & Alain-Désiré Nimubona, 2005. "The Pigouvian Tax Rule in the Presence of an Eco-Industry," Working Papers 2005.57, Fondazione Eni Enrico Mattei.
- Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2005. "The Pigouvian Tax Rule in the Presence of an Eco-Industry," Working Papers hal-00243020, HAL.
- Fredriksson, Per G., 1998. "Environmental policy choice: Pollution abatement subsidies," Resource and Energy Economics, Elsevier, vol. 20(1), pages 51-63, March.
- Stranlund, John K., 1997. "Public Technological Aid to Support Compliance to Environmental Standards," Journal of Environmental Economics and Management, Elsevier, vol. 34(3), pages 228-239, November.
- Eberhard Feess & Gerd Muehlheusser, 2002. "Strategic Environmental Policy, Clean Technologies and the Learning Curve," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(2), pages 149-166, October.
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