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Optimal overall emissions taxation in durable goods oligopoly

  • Sagasta Elorza, Amagoia
  • Usategui Díaz de Otalora, José María
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    We analyze optimal second-best emission taxes in a durable good industry under imperfect competition. The analysis is performed for three different types of emissions and for situations where the good is rented, sold or simultaneously sold and rented. We show, for durable goods that may cause pollution in a period (or in periods) different from the production period, that the expected overall emission tax and the expected total marginal environmental damage per unit produced in each period are the relevant variables to consider in the analysis of overinternalization and in the comparison of optimal emission taxes for renting, selling and renting-selling firms. Our results allow to extend some previous results in the literature to these durable goods and provide an adequate perspective on some other results (in particular, we point out the limitations of focusing only, for those durable goods, on the level and effects of the optimal emission tax in the production period).

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    File URL: http://hdl.handle.net/10810/9178
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    Paper provided by University of the Basque Country - Department of Foundations of Economic Analysis II in its series DFAEII Working Papers with number 9178.

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    Date of creation: 2012
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    Handle: RePEc:ehu:dfaeii:9178
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    Order Information: Postal: Dpto. de Fundamentos del Análisis Económico II, = Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain
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    1. Saggi, Kamal & Vettas, Nikolaos, 1999. "Leasing versus Selling and Firm Efficiency in Oligopoly," Working Papers 99-07, Duke University, Department of Economics.
    2. Katsoulacos, Yannis & Xepapadeas, Anastasios, 1994. "Environmental Policy Under Oligopoly with Endogenous Market Structure," CEPR Discussion Papers 955, C.E.P.R. Discussion Papers.
    3. R. Simpson, 1995. "Optimal pollution taxation in a Cournot duopoly," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 6(4), pages 359-369, December.
    4. Goering, Gregory E & Boyce, John R, 1999. "Emissions Taxation in Durable Goods Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 47(1), pages 125-43, March.
    5. Buchanan, James M, 1969. "External Diseconomies, Corrective Taxes, and Market Structure," American Economic Review, American Economic Association, vol. 59(1), pages 174-77, March.
    6. Bulow, Jeremy I, 1982. "Durable-Goods Monopolists," Journal of Political Economy, University of Chicago Press, vol. 90(2), pages 314-32, April.
    7. Bulow, Jeremy, 1986. "An Economic Theory of Planned Obsolescence," The Quarterly Journal of Economics, MIT Press, vol. 101(4), pages 729-49, November.
    8. Barnett, A H, 1980. "The Pigouvian Tax Rule under Monopoly," American Economic Review, American Economic Association, vol. 70(5), pages 1037-41, December.
    9. Sam Bucovetsky & John Chilton, 1986. "Concurrent Renting and Selling in a Durable-Goods Monopoly under Threat of Entry," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 261-275, Summer.
    10. Runkel, Marco, 2002. "A Note on 'Emmisions Taxation in Durable Goods Oligopoly.'," Journal of Industrial Economics, Wiley Blackwell, vol. 50(2), pages 235, June.
    11. Coase, Ronald H, 1972. "Durability and Monopoly," Journal of Law and Economics, University of Chicago Press, vol. 15(1), pages 143-49, April.
    12. Marco Runkel, 1999. "First-Best and Second-Best Regulation of Solid Waste under Imperfect Competition in a Durable Good Industry," Volkswirtschaftliche Diskussionsbeiträge 81-99, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
    13. Marco Runkel, 2004. "Optimal Emissions Taxation under Imperfect Competition in a Durable Good Industry," Bulletin of Economic Research, Wiley Blackwell, vol. 56(2), pages 115-132, 04.
    14. John R. Boyce & Gregory E. Goering, 1997. "Optimal Taxation of a Polluting Durable Goods Monopolist," Public Finance Review, , vol. 25(5), pages 522-541, September.
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