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Emission Taxes and Standards for an Asymmetric Oligopoly

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  • Ngo Van Long
  • Antoine Soubeyran

Abstract

We characterize optimal firm-specific emission tax rates, and optimal firm-specific emission standards, and provide intuitive explanation on differential treatments. We show that there is a unified framework for deriving firm-specific policy measures. When firms are identical, the optimal policy may call for unequal treatments of equals. When firms are not identical, we characterize the optimal degree of dispersion of tax rates. The unequal treatments of unequals is explained in terms of the motive of the government to affect industry concentration. Our new approach is geometric in nature and enables us to give optimality conditions in global terms. On décrit les propriétés des taux de taxes pigouviennes optimales pour les firmes polluantes, ainsi que les standards d'émission optimaux. On démontre qu'il y a un cadre unifié pour analyser ces deux instruments d'intervention. Pour atteindre l'optimum social dans le cas où les firmes sont identiques, il faut les traiter de manière différente. On explique le traitement inégal des égaux en terme du motif d'influencer la concentration de l'industrie. Notre méthode de solution est de nature géométrique, ce qui nous permet d'obtenir les conditions d'optimalité globales.

Suggested Citation

  • Ngo Van Long & Antoine Soubeyran, 2001. "Emission Taxes and Standards for an Asymmetric Oligopoly," CIRANO Working Papers 2001s-07, CIRANO.
  • Handle: RePEc:cir:cirwor:2001s-07
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    File URL: http://www.cirano.qc.ca/files/publications/2001s-07.pdf
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    References listed on IDEAS

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    1. Rauscher, Michael, 1994. "Environmental regulation and the location of polluting industries," Kiel Working Papers 639, Kiel Institute for the World Economy (IfW).
    2. Gérard Gaudet & Stephen W. Salant, 1991. "Uniqueness of Cournot Equilibrium: New Results From Old Methods," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 399-404.
    3. Kennedy Peter W., 1994. "Equilibrium Pollution Taxes in Open Economies with Imperfect Competition," Journal of Environmental Economics and Management, Elsevier, vol. 27(1), pages 49-63, July.
    4. Buchanan, James M, 1969. "External Diseconomies, Corrective Taxes, and Market Structure," American Economic Review, American Economic Association, vol. 59(1), pages 174-177, March.
    5. Van Long, N. & Soubeyran, A., 1997. "Cost Manipulation in Oligopoly: A Duality Approach," ASSET - Instituto De Economia Publica 174, ASSET (Association of Southern European Economic Theorists).
    6. Benchekroun, Hassan & van Long, Ngo, 1998. "Efficiency inducing taxation for polluting oligopolists," Journal of Public Economics, Elsevier, vol. 70(2), pages 325-342, November.
    7. Katsoulacos, Yannis & Xepapadeas, Anastasios, 1995. " Environmental Policy under Oligopoly with Endogenous Market Structure," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(3), pages 411-420, September.
    8. Greg Shaffer & Stephen W. Salant, 1999. "Unequal Treatment of Identical Agents in Cournot Equilibrium," American Economic Review, American Economic Association, vol. 89(3), pages 585-604, June.
    9. Ballard, Charles L & Shoven, John B & Whalley, John, 1985. "General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States," American Economic Review, American Economic Association, vol. 75(1), pages 128-138, March.
    10. Van Long, Ngo & Soubeyran, Antoine, 2000. "Existence and uniqueness of Cournot equilibrium: a contraction mapping approach," Economics Letters, Elsevier, vol. 67(3), pages 345-348, June.
    11. Barnett, A H, 1980. "The Pigouvian Tax Rule under Monopoly," American Economic Review, American Economic Association, vol. 70(5), pages 1037-1041, December.
    12. Long, Ngo Van & Soubeyran, Antoine, 2001. "Cost Manipulation Games in Oligopoly, with Costs of Manipulating," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(2), pages 505-533, May.
    13. Van Long, N. & Soubeyran, A., 1997. "Cost Manipulation in an Asymmetric Oligopoly: The Taxation Problem," ASSET - Instituto De Economia Publica 173, ASSET (Association of Southern European Economic Theorists).
    14. Brander, James A., 1995. "Strategic trade policy," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 27, pages 1395-1455 Elsevier.
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    Cited by:

    1. Gerda Dewit & Dermot Leahy, 2015. "Tax Uniformity: A Commitment Device for Restraining Opportunistic Behavior," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(5), pages 641-672, October.
    2. Ngo Long & Antoine Soubeyran, 2005. "Selective penalization of polluters: an inf-convolution approach," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 25(2), pages 421-454, February.

    More about this item

    Keywords

    Pollution; oligopoly; Pollution; oilgopole;

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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