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Emission taxes and the market for abatement goods and services

Author

Listed:
  • Maia David

    () (ECO-PUB - Economie Publique - INRA - Institut National de la Recherche Agronomique - AgroParisTech)

  • Alain-Désiré Nimubona

    (Department of Economics - University of Waterloo [Waterloo])

  • Bernard Sinclair-Desgagné

Abstract

This paper examines the effect of emission taxes on pollution abatement and social welfare, when abatement goods and services are provided by a Cournot oligopoly with free-entry. We point out initially that a higher tax not only increases demand for abatement; it also makes polluters less sensitive to price. This attracts a larger number of abatement suppliers while possibly inducing each one of them to produce less. Total abatement always goes up, however, when the delivery of abatement goods and services exhibits decreasing returns to scale. We then calculate the welfaremaximizing-emission tax and compare it to the Pigouvian tax.

Suggested Citation

  • Maia David & Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2011. "Emission taxes and the market for abatement goods and services," Post-Print hal-01019345, HAL.
  • Handle: RePEc:hal:journl:hal-01019345
    DOI: 10.1016/j.reseneeco.2010.04.010
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01019345
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    References listed on IDEAS

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    1. Maia David & Bernard Sinclair-Desgagné, 2005. "Environmental Regulation and the Eco-Industry," Journal of Regulatory Economics, Springer, vol. 28(2), pages 141-155, September.
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    13. William Novshek, 1980. "Cournot Equilibrium with Free Entry," Review of Economic Studies, Oxford University Press, vol. 47(3), pages 473-486.
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    18. Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2013. "The Pigouvian Tax Rule in the Presence of an Eco-Industry," Economics Bulletin, AccessEcon, vol. 33(1), pages 747-752.
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    Citations

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    Cited by:

    1. Alain-Désiré Nimubona, 2010. "Pollution Policy and Liberalization of Trade in Environmental Goods," Working Papers 1004, University of Waterloo, Department of Economics, revised May 2010.
    2. Sonia Schwartz & Hubert Stahn, 2014. "Competitive Permit Markets and Vertical Structures: The Relevance of Imperfectly Competitive Eco-Industries," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(1), pages 69-95, February.
    3. repec:eee:jeeman:v:84:y:2017:i:c:p:44-61 is not listed on IDEAS
    4. Natalia Zugravu-Soilita, 2017. "Trade in Environmental Goods: Empirical Exploration of Direct and Indirect Effects on Pollution by Country’s Trade Status," Working Papers 2017.56, Fondazione Eni Enrico Mattei.
    5. Damien Sans & Sonia Schwartz & Hubert Stahn, 2014. "About Polluting Eco-Industries: Optimal Provision of Abatement Goods and Pigouvian Fees," Working Papers halshs-01083464, HAL.
    6. Reichenbach, Johanna & Requate, Till, 2012. "Subsidies for renewable energies in the presence of learning effects and market power," Resource and Energy Economics, Elsevier, vol. 34(2), pages 236-254.
    7. Alain-Désiré Nimubona, 2012. "Pollution Policy and Trade Liberalization of Environmental Goods," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 53(3), pages 323-346, November.
    8. Damien Sans & Sonia Schwartz & Hubert Stahn, 2017. "About polluting eco-industries: optimal provision of abatement goods and Pigouvian fees," Post-Print hal-01682684, HAL.
    9. Ouchida, Yasunori & Goto, Daisaku, 2016. "Environmental research joint ventures and time-consistent emission tax: Endogenous choice of R&D formation," Economic Modelling, Elsevier, vol. 55(C), pages 179-188.
    10. Damien Sans, 2015. "Optimal Taxation Rule Reversal in the Presence of Gentle Polluters and Greedy Cleaners," Working Papers halshs-01247190, HAL.
    11. Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2011. "Polluters and Abaters," Annals of Economics and Statistics, GENES, issue 103-104, pages 9-24.
    12. Julien Jacob, 2011. "Innovation and diffusion in risky industries under liability law: the case of “double-impact” innovations," Working Papers of BETA 2011-24, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    13. Kim, Seung-Leul & Lee, Sang-Ho, 2016. "The licensing of eco-technology under emission taxation: Fixed fee vs. auction," International Review of Economics & Finance, Elsevier, vol. 45(C), pages 343-357.
    14. repec:eee:resene:v:52:y:2018:i:c:p:33-49 is not listed on IDEAS
    15. repec:eee:resene:v:50:y:2017:i:c:p:105-123 is not listed on IDEAS
    16. Bouwe R. Dijkstra & Anuj J. Mathew, 2016. "Liberalizing trade in environmental goods and services," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 18(4), pages 499-526, October.
    17. Lota Dabio Tamini & Sorgho Zakaria, 2016. "Trade in environmental goods: how important are trade costs elasticities?," Cahiers de recherche CREATE 2016-3, CREATE.
    18. repec:eee:ecmode:v:64:y:2017:i:c:p:601-609 is not listed on IDEAS
    19. Lee, Sang-Ho & Nakamura, Tamotsu & Park, Chul-Hi, 2017. "Optimal Privatization Policy in a Mixed Eco-Industry in the Presence of Commitments on Abatement Technologies," MPRA Paper 80902, University Library of Munich, Germany.
    20. Alain-Désiré Nimubona & Hassan Benchekroun, 2014. "Environmental R&D in the Presence of an Eco-Industry," Working Papers 1406, University of Waterloo, Department of Economics, revised Sep 2014.
    21. Hattori, Keisuke, 2011. "Optimal Environmental Policy under Monopolistic Provision of Clean Technologies," MPRA Paper 28837, University Library of Munich, Germany.
    22. Lan, Jing & Munro, Alistair & Liu, Zhen, 2017. "Environmental regulatory stringency and the market for abatement goods and services in China," Resource and Energy Economics, Elsevier, vol. 50(C), pages 105-123.

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