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Partial cross-ownership and strategic environmental policy

  • Bárcena Ruiz, Juan Carlos
  • Campo Corredera, María Luz

This paper analyzes the effect that passive investment in rival firms has on the setting of cooperative and non-cooperative environmental taxes. We consider two firms located in different countries, one of which owns a stake in its rival. We show that partial cross-ownership affects the taxes set by the countries in the cooperative and non-cooperative cases. Depending on the stake that one firm has in its rival we show that cooperative taxes may he higher or lower than non-cooperative taxes. Moreover, for intermediate values of the stake, the non-cooperative tax is higher in one country and lower in the other than the cooperative tax.

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Paper provided by Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I in its series IKERLANAK with number 2011-47.

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Date of creation: 2011
Date of revision:
Handle: RePEc:ehu:ikerla:201147
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Order Information: Postal: Dpto. de Fundamentos del Análisis Económico I, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain

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