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Environmental and Trade Policies for Oligopolistic Industry in the Presence of Consumption Externalities

Author

Listed:
  • Jota Ishikawa

    (Hitotsubashi University (Japan) and RIETI (Japan))

  • Toshihiro Okubo

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

We explore the effects of environmental and trade policies with negative consumption externalities when a domestic firm and a foreign rival produce imperfect substitutes and compete in the domestic market. Consumption of the foreign product generates more emissions than that of the domestic product. Emission taxes reduce emissions, harm the foreign firm, but may benefit the domestic firm. Tariffs could mitigate externalities more "effectively" than emission taxes. Consumption subsidies provided to the domestic product may raise emissions and worsen domestic welfare. Stringent environmental policies may induce the foreign firm to produce an environmentally friendly good, though environmental damages may increase.

Suggested Citation

  • Jota Ishikawa & Toshihiro Okubo, 2010. "Environmental and Trade Policies for Oligopolistic Industry in the Presence of Consumption Externalities," Discussion Paper Series DP2010-28, Research Institute for Economics & Business Administration, Kobe University.
  • Handle: RePEc:kob:dpaper:dp2010-28
    as

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    File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2010-28.pdf
    File Function: First version, 2010
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    Citations

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    Cited by:

    1. Mark R Metcalfe & John C Beghin, 2015. "Piecemeal Reform of Trade and Environmental Policy When Consumption Also Pollutes," Economics Bulletin, AccessEcon, vol. 35(4), pages 2282-2287.
    2. Takao Asano & Noriaki Matsushima, 2014. "Environmental regulation and technology transfers," Canadian Journal of Economics, Canadian Economics Association, vol. 47(3), pages 889-904, August.
    3. Liu, Chih-Chen & Mukherjee, Arijit & Wang, Leonard F.S., 2015. "Horizontal merger under strategic tax policy," Economics Letters, Elsevier, vol. 136(C), pages 184-186.

    More about this item

    Keywords

    Environmental policies; Trade policies; Consumption externalities; International oligopoly; Differentiated products;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F18 - International Economics - - Trade - - - Trade and Environment

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