Environmental Taxation and International Eco-Industries
Environmental policies are discussed when two countries differ in their ability to abate pollution. Northern eco-industries (the industry supplying abatement activities) are more efficient than Southern ones. Segmented environmental markets and a Northern monopoly yield identical second-best taxes in both countries. When markets are global, Southern countries underestimate the market power of eco-industries. Introducing competition creates positive (resp. negative) rent-shifting distortions in South (resp. North). Cooperation could reduce Northern pollution but has ambiguous consequences in South.
|Date of creation:||Feb 2007|
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