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The Pigouvian Tax Rule in the Presence of an Eco-Industry

Author

Listed:
  • Alain-Désiré Nimubona

    (HEC Montréal - HEC Montréal)

  • Bernard Sinclair-Desgagné

    (CECO - Laboratoire d'économétrie de l'École polytechnique - X - École polytechnique - CNRS - Centre National de la Recherche Scientifique)

Abstract

Pollution abatement goods and services are now largely being delivered by a specialized "eco-industry.'' This note reconsiders Pigouvian taxes in this context. We show that the optimal emission tax must depart from the marginal social cost of pollution according to the polluters' and the environment firms' relative market power.

Suggested Citation

  • Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2005. "The Pigouvian Tax Rule in the Presence of an Eco-Industry," Working Papers hal-00243020, HAL.
  • Handle: RePEc:hal:wpaper:hal-00243020
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    References listed on IDEAS

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    1. Y.H. Farzin & P.M. Kort, 2000. "Pollution Abatement Investment When Environmental Regulation Is Uncertain," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(2), pages 183-212, April.
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    4. Maia David & Bernard Sinclair-Desgagné, 2005. "Environmental Regulation and the Eco-Industry," Journal of Regulatory Economics, Springer, vol. 28(2), pages 141-155, September.
    5. Morgenstern, Richard D., 1995. "Environmental Taxes: Dead or Alive?," Discussion Papers 10595, Resources for the Future.
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    7. Ngo Van Long & Antoine Soubeyran & Ngo Van Long & Antoine Soubeyran, 1999. "Pollution, Pigouvian taxes and asymmetric international oligopoly," Chapters, in: Emmanuel Petrakis & Eftichios S. Sartzetakis & Anastasios Xepapadeas (ed.), Environmental Regulation and Market Power, chapter 9, pages 175-194, Edward Elgar Publishing.
    8. Buchanan, James M, 1969. "External Diseconomies, Corrective Taxes, and Market Structure," American Economic Review, American Economic Association, vol. 59(1), pages 174-177, March.
    9. Katsoulacos, Yannis & Xepapadeas, Anastasios, 1995. "Environmental Policy under Oligopoly with Endogenous Market Structure," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(3), pages 411-420, September.
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    Citations

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    Cited by:

    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.
    2. Canton, Joan & David, Maia & Sinclair-Desgagné, Bernard, 2012. "Environmental Regulation and Horizontal Mergers in the Eco-industry," Strategic Behavior and the Environment, now publishers, vol. 2(2), pages 107-132, July.
    3. Idrissa Sibailly, 2013. "On the Pigouvian Tax Rule in an Open Economy: Opening the Gate to the Eco-industry," Working Papers hal-00911464, HAL.
    4. David, Maia & Nimubona, Alain-Désiré & Sinclair-Desgagné, Bernard, 2011. "Emission taxes and the market for abatement goods and services," Resource and Energy Economics, Elsevier, vol. 33(1), pages 179-191, January.
    5. Joan Canton & Maia David & Bernard Sinclair-Desgagné, 2007. "Environmental regulation and mergers within the eco-industry," Working Papers 2007/01, INRA, Economie Publique.
    6. Damien Sans, 2015. "Optimal Taxation Rule Reversal in the Presence of Gentle Polluters and Greedy Cleaners," Working Papers halshs-01247190, HAL.
    7. Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2011. "Polluters and Abaters," Annals of Economics and Statistics, GENES, issue 103-104, pages 9-24.
    8. Idrissa G.-O. Sibailly, 2015. "On the pigouvian tax rule in an open economy: the case of abatement technology trade," Economics Bulletin, AccessEcon, vol. 35(4), pages 2733-2741.
    9. Joan Canton, 2007. "Environmental Taxation and International Eco-Industries," Working Papers 2007.26, Fondazione Eni Enrico Mattei.
    10. 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.
    11. 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.
    12. Canton, Joan, 2007. "Environmental Taxation and International Eco-Industries," Economic Theory and Applications Working Papers 10274, Fondazione Eni Enrico Mattei (FEEM).
    13. 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.
    14. Joan Canton & Antoine Soubeyran & Hubert Stahn, 2008. "Environmental Taxation and Vertical Cournot Oligopolies: How Eco-industries Matter," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 40(3), pages 369-382, July.
    15. Damien Sans & Sonia Schwartz & Hubert Stahn, 2014. "About Polluting Eco-Industries: Optimal Provision of Abatement Goods and Pigouvian Fees," Working Papers halshs-01083464, HAL.
    16. Canton, Joan, 2008. "Redealing the cards: How an eco-industry modifies the political economy of environmental taxes," Resource and Energy Economics, Elsevier, vol. 30(3), pages 295-315, August.
    17. Abdul Baki, Ghina & Marrouch, Walid, 2022. "Environmental taxation in the Bertrand differentiated duopoly: New insights," Resource and Energy Economics, Elsevier, vol. 70(C).
    18. Bocar Samba Ba, 2016. "Phosphorus conservation, eutrophication reduction and social welfare improvement: taxation of extracted phosphorus or subsidy of recycled phosphorus ?," Post-Print hal-02801273, HAL.
    19. Canton, Joan, 2007. "Redealing the Cards: How The Presence of an Eco-Industry Modifies the Political Economy of Environmental Policies," Economic Theory and Applications Working Papers 10271, Fondazione Eni Enrico Mattei (FEEM).
    20. 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.
    21. Maia David & Alain-Désiré Nimubona & Bernard Sinclair-Desgagné, 2007. "Environmental Taxation and the Structure of the Eco-industry," Working Papers 2007/02, INRA, Economie Publique.
    22. Maia David & Bernard Sinclair-Desgagné, 2006. "Revisiting the Environmental Subsidy in the Presence of an Eco-Industry," Working Papers 2006/04, INRA, Economie Publique.
    23. Joan Canton, 2007. "Redealing the Cards: How the Presence of an Eco-Industry Modifies the Political Economy of Environmental Policies," Working Papers 2007.25, Fondazione Eni Enrico Mattei.
    24. Xinming Du, 2023. "Symptom or Culprit? Social Media, Air Pollution, and Violence," CESifo Working Paper Series 10296, CESifo.

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    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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