Environmental Policy Under Oligopoly with Endogenous Market Structure
Emission taxes under oligopoly with both fixed number and endogenous market structure (perhaps the most relevant market structures for policy issues) are examined. In the latter case, and contrary to what is expected under imperfect competition, the optimal tax could exceed marginal external damages, which implies that externalities generated by oligopolistic firms could be optimally controlled by over-internalizing environmental damages. Under endogenous market structure, a scheme consisting of a licence fee and a second-best under-internalizing emission tax can increase social welfare when compared with the use of a single emission tax exceeding marginal damages.
|Date of creation:||May 1994|
|Date of revision:|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:955. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.